Attacking poverty
DR. Fakhruddin Ahmed, after joining Palli Karma Shahayak Foundation (PKSF), paid an extensive visit to the country's north and south zones to see the progress of the poverty alleviation programmes initiated by member organisations supported by PKSF. After the visit, he told me that people in rural Bangladesh were moving up the curve.
Afterwards, courtesy MFIs like TMSS, Buro Bangladesh, Shakti and Marie Stopes, I attended para/village meetings in many districts. I could not but fully agree with Dr. Ahmed that rural Bangladesh was changing fast. People can afford to buy more food, drinks, life style items or even luxury ones. We saw massive billboards of Pran juice, Mum water and even Walton television in the rural areas in Rangpur and Dinajpur.
This was possible due to good harvest for the last several years, increasing remittances, safety- net programmes, expansion of rural farm and non-farm credit, rise of micro-entrepreneurship and, more importantly, shifting the terms of trade in favour of rural Bangladesh during crisis period. Besides, there has been significant improvement in rural wage level.
Where Bangladesh Khetmajur Samity (association of land labourers) demanded a daily wage equivalent to three and half kilograms of rice in 1984, it is now equivalent to 6 kilograms of rice. As a result, where almost 80% people were below poverty level in 1972, the number came down to 40% in 2005.
I was privy to a pre-budget discussion at the ministry of finance, where the house was briefed on possible outcome of the recently held 2010 household income-expenditure survey (HIES), and was told that the number of people living below the poverty line was likely to come down to 31-32%.
Per year poverty reduction during 2000-2005 was around 1.78%, which improved to 2% during 2005-2010 period due to various budgetary measures (guaranteed employment, vulnerable group feeding, food for works and other employment generation or social safety-net programmes) taken by the government and non-government initiatives with regard to entrepreneurship development and financing.
As mentioned earlier, according to HIES-2005, 40% of the population used to live below poverty level. During the last 5-years poverty has decreased by almost 10%. The latest survey was conducted from February 1, 2010 to January 31 this year, based on people's basic needs. In this survey Cost of Basic Needs (CBN) method instead of Daily Calorie Intake (DCI) method was used.
The mentioned survey reveals that average household monthly income in urban areas is Tk.15,000 and Tk.9,000 in rural areas. In the 2005 survey it was Tk.10,463 in urban areas and Tk.6,096 in rural areas. The highest monthly average income was seen in Dhaka Division -- more than Taka 11,000 -- and the minimum monthly average income was found in Rangpur Division -- Tk.7,000.
Expenditure on food has decreased a bit in relation to income. The recent survey shows that 54.81% of income is used to buy food, which was 60% in 2005. Urban people have to pay more for food -- 58.81% of their income -- than rural people, who spend 48.19%. The survey assumed 4.50 members per household.
Bangladesh bureau of statistics took 612 Primary Sample Units (PSU) from all over the country for this survey. In every PSU, 20 households were chosen from 250 households after analysing the members' occupation, life-style, social status etc.
For 15 days in a row, surveyors observed the lifestyle of the household members. What kind of food they consumed, what type of clothing they wore, their assets, occupations and many other topics came under surveyors' observation.
Although prices of goods have risen, poverty has decreased due to increase in income. Employment opportunity has also increased in rural areas with increased wages.
If we follow the GDP growth during the last five years, poverty should have decreased to 27-28%. However, due to global recession and natural calamities locally, it didn't happen. It is said that 1% increase in GDP should result in 0.6% reduction in poverty level. Keeping that in cognisance, I would think 31-32% poverty rate according to recent HIES is convincing.
While recognition has been given to cohesive policy undertaken through the budgetary measures, especially for the disadvantaged populace and regions, the minister and staff of the ministry of finance deserve special kudos for not having lost sight of the poor people and for trying to bring them up the curve. Bangladesh's social safety net programmes (84 in number) are some of the best in the region.
However, we need to do more in a focused manner, by allocating increased quota for the disadvantaged target groups, energising the local governments and, most importantly, capacity building in the concerned ministries, specially health, education, food, agriculture, local government and communication.
We often hear that spending one taka in the right way is much tougher than earning one taka through tax incidences. Lately, our development partners have started to voice their concern regarding aid effectiveness as well as qualitative expenditure to divert funding to the right streams of the economy with due accountability.
Here, one should not also forget that wealth creation is happening in both urban and rural areas at the cost of few most vulnerable groups; therefore, while poverty is reducing, income is growing, and income inequality is also growing. It seems we can't do much about this, other than focusing more on distribution economics.
We can of course always tame the situation and bring down the "passenger" population (almost 10% of the total population) size through targeted investment in health and education infrastructure, along with a social awareness campaign. However, under no circumstances should we forget about encouraging wealth creation to support growth and entrepreneurship.
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