Effective initiatives needed to reduce inflation, income inequality

The just announced budget for FY 2023-24 will be a tool to control inflation. Initiatives should be taken to increase reserves. To stop remittances coming to Hundi, all concerned including Bangladesh Bank should work together. At the same time, importance should also be given to the need to create skilled workers suitable for the industry by ensuring quality education. Also, initiatives should be taken to address skill shortages among workers in certain sectors in ready-made garment factories.

But the point is that there is a strong commitment by the state and government to work on these issues and there are various efforts to reduce inequality. The government is working towards that goal. The authorities should work on increasing investment in the private sector. Otherwise, employment will not be created. In the last three-four years, private investment has decreased somewhat, it should be increased. There are also some problems in the approval and implementation of various projects that need to be ensured by more intensive monitoring and observation.

Inflation can never be controlled by raising interest rates. Current inflation is caused by global factors. It will not be controlled by raising interest rates. Supply should be increased. In the budget for 2023-24, the government has given more importance to inflation. Government budgeting is one of the ways to control inflation. Everyone has to work on how to take the country’s economy to a pre-Covid stage. The government has said that returning to the pre-Covid situation is the main goal of the budget for 2023-24.

We do not yet have a common dollar rate. There are different rates for the dollar. However, Bangladesh Bank says that the dollar rate will come to a single rate in the next three to four months. Hundi control is not possible even if the government and banks want it.

In the current context, there is a shortage of skilled workers, as a result of which the public and private companies are not getting skilled workers. This shortage of skilled workers is mainly in the light and medium engineering and electronics sectors. These data come out in the research report titled ‘Skill Mismatch and Labor Productivity: Evidence from to Engineering Sector in Bangladesh’.

Two types of inconsistencies can be seen in the context of Bangladesh--Vertical unconformity and horizontal unconformity. Vertical mismatch basically refers to a lack of educated workers as per demand and horizontal mismatch refers to a lack of skilled manpower. The rate of vertical disharmony is 60 per cent. Besides, most of the factory workers are less educated. Also, vertical inconsistency is more common in small-scale factories. The rate is 83 per cent.

In the readymade garment sector, relative skill shortages are less at the production level, but more at the managerial level. The kinds of workers that garment factory owners want are not available. In the garment sector, three-quarters of factory vacancies are filled within a week, but skilled workers are difficult to find. Due to the increase in development project time, the cost is increasing. 80 per cent of the project cost increased. Cost and time increased by 50 per cent, and neither cost and time increased by 13 per cent on the project. The average cost of the projects are increased by 26 per cent and the average time increased by 95 per cent.

Most of the plans that are made in our country are done without considering the current situation, but it is very important. We have to take policy decisions considering the situation. Our educational deficit is increasing day by day. We are the most populous country in the world. Manpower is our greatest asset. They should be made efficient. It is not possible to improve education and health with money. Boro paddy and Aman paddy are growing well. This is supposed to lower the price, but it has no effect on the market. If India can control inflation, why can’t we?’

Due to the corona pandemic, the rich have become richer and the poor have become poorer. The gap between the rich, middle class, lower middle class and poor is only increasing. Besides increasing per capita income, everyone has to work on this issue. The government has to work together to overcome this situation. Initiatives must be taken to reduce the instability that is being created in the country and society due to the increase in poverty and inequality. Attention should be given to reducing the increase of social and family inequality along with family turmoil.

Bangladesh’s success in various poverty alleviation efforts has attracted the attention of the world. Despite this appreciable success, the fact that we have a long way to go to build a poverty-free Bangladesh is clear in various reports of the General Economics Department (GED), Bangladesh Institute of Development Studies (BIDS) and Bureau of Statistics (BBS) of the Government Organization Planning Commission.

Economists say that the income of poor people is decreasing due to a reduction in employment and irregularity in social security. On the other hand, the wealth of the rich is increasing. But government planners feel that when a country develops rapidly, inequality naturally increases. The government is taking various steps for the poor to reduce inequality, so there is nothing to worry about inequality. But the reality is that the benefits of various promises and initiatives of the government to ensure balanced development across the country and reduce income inequality are not properly visible. Rather, the poor people of the country are getting poorer day by day, and the wealth of the rich is increasing rapidly.

In the report published by the World Bank in 2018, the position of Bangladesh is fifth in terms of rich-poor inequality. India is the only Asian country ahead of Bangladesh on this list. The remaining three countries are Nigeria, Congo and Ethiopia in Africa. Again, in terms of the rate of increase in the number of super-rich or billionaires, Bangladesh has left behind the world’s big economies. This rate is higher than 75 major economies including the United States, China, Japan, and India. As a percentage, millionaires increased by 17 per cent in one year.

It is questionable how much the real income of the people has increased even though the per capita income has increased due to inequality and the increase in commodity prices has increased the suffering of the common man.

There are four sectors of per capita income those add remittances to Gross Domestic Product (GDP) give national income. These are--agriculture, industry, services and expatriate income (remittances).

According to BBS calculations, currently, the rate of poor people in the country is 20.5 per cent of the total population. Out of this, 7 per cent are extremely poor. Meanwhile, income has increased but tax collection has not increased. In a country of 17 crore people, there are 75 lakh TINs. Only 23 lakh people pay income tax. Currently, tax collection is 9.4 per cent of GDP which is the least in South Asia. In 2010, the participation of large and medium industries in GDP was 13.12 per cent. In 2018, it increased to 18.31 per cent. But in 2010, the participation of small-scale industries in GDP was 3.30 per cent. And in 2018 it was only 3.63 per cent. This means that the industrial sector is occupied by big businessmen.

Bangladesh is now a lower-middle-income country. If the average per capita income of a country exceeds $1046 dollars in three years, it falls into the lower middle-income country, according to the World Bank. As such, Bangladesh crossed this limit long ago.

Countries with per capita income of $1,460 to $12,736 are middle-income countries. If the income is from $1046 to $4125, it will be a lower middle-income country and if the income is from $4126 dollars to $12736 dollars, the countries are called upper middle-income countries. If the per capita income is more than that, those countries are called high-income countries. By definition, Bangladesh has reached upper middle income.

The writer is a columnist and researcher. He can be contacted at [email protected]