Challenges for reducing inequality

According to many observers, the Covid-19 pandemic has made the rich richer and the poor poorer. The gap between rich, middle class, lower-middle class, and the poor is only widening. In addition to increasing per capita income, everyone has to work on this issue. The government needs to work together to overcome this situation. The authorities must take initiatives to reduce the growing instability in the country and society due to increasing poverty and inequality. We need to focus on reducing social and family inequality.

This problem is being observed almost throughout the world. Virtually every country has been affected by the phenomenon. Growing inequality is further exposing the disparity among different sections of the society. The wealthiest people in the world, like Elon Musk, Jeff Bezos, Mark Zuckerberg, and Bill Gates, are getting richer. The combined wealth of the world’s ten wealthiest people has grown from USD 700 billion to USD 1.5 trillion. Daily income has increased by about 113 crore dollars. However, looking at the other side of the coin, about 200 million people in the world have fallen into the list of the new poor. The world is now amid extreme inequality. Structural policies are chosen for the richest and most powerful in times of economic inequality. Poor people, women, and disadvantaged people are the victims of racial discrimination. This inequality is ridiculously offensive. These inequalities have created violent conditions and widened the gap between people of different strata of society.

In the meantime, the per capita population of our country has increased again. The per capita income of the people of our country is now 2,824 US dollars. Prices of all commodities are rising at a phenomenal rate due to the Ukraine-Russia war and the volatile global economic situation. Due to high inflation, the common person has to reduce consumption in many cases. Meanwhile, the proportion of rich people in the country increases even though the common people are suffering. The number of multi-millionaires (people with at least ten million taka) in the country has crossed one lakh. Per capita income has increased, and the country is becoming a developing country; these are hopeful and positive things. At the same time, we have to work on reducing the widening gap between the rich and the poor.

Relevant government departments and ministries have to carry out more important responsibilities from time to time, leading to the development of new potential sectors. Prospective new sectors will play a decisive role in achieving and advancing the prosperity of Bangladesh. The people of Bangladesh are not weak or incompetent in any way. They can work hard. Women and men of different classes and professions who used to be trapped in unemployment, poverty and helplessness, are now coming forward to explore new possibilities by utilizing their talents, intelligence, strength, courage and hard work. Many are building their fortunes in a new way by introducing themselves as entrepreneurs. In this way, the image of different areas and towns is changing with the joint efforts of all.

Improving education, communication infrastructure, women’s education, healthcare, free book distribution to students, providing social safety net support for socially disadvantaged, elderly, widows, persons with disabilities, divorced women, autism, etc., are excellent initiatives. The present government has contributed to enhancing the status of freedom fighters as national heroes. It has introduced shelter, one house, one farm project, women empowerment, and the overall development of various sectors.

The success of Bangladesh in alleviating poverty has attracted the world’s attention. Despite these commendable achievements, there is a long way to go to build a poverty-free Bangladesh, according to a report by the General Economics Department (GED) and the Bureau of Statistics (BBS). The picture that emerges in this report of the country’s poverty situation is quite worrying. According to a new index of poverty reduction, six and a half crore people in the country are poor. According to the Multidimensional Poverty Index (MPI), there are too many poor people in the country. The report mentioned above states that 36.1 of the people in Bangladesh are victims of multidimensional poverty. According to the Bangladesh Bureau of Statistics (BBS), the country’s population increased to 16 crores 93 lakhs in 2021. As such, the number of victims of multidimensional poverty is 8 crore 51 lakhs. Prices of most commodities, including rice, pulses, flour, and edible oil, have been steadily rising. The people with low income and poor class are most affected by this. However, the middle class has been under pressure for a long time. More and more members the middle class crowding in TCB’s truck cell line to buy consumer goods at fair prices. A few days ago, the commerce minister also admitted that the middle class is suffocated due to rising commodity prices. At the same time, there are many social impacts that we have to pay attention to.

Economists say declining incomes and irregularities in social security are reducing the income of the poor. On the other hand, the wealth of the rich is increasing. However, many planners believe that inequality naturally increases when a country develops rapidly. The government says it is taking steps to reduce disparities for the poor, so there is nothing to worry about. But the reality is that the government’s various promises and initiatives to ensure balanced development and reduce income inequality across the country are not paying off to the desired level. On the contrary, the country’s poor people are getting poorer day by day, and the wealth of the rich is increasing rapidly.

According to the World Bank’s 2016 report, Bangladesh ranks fifth in terms of rich-poor inequality. Only India is among the Asian countries in front of Bangladesh in this list. The other three countries are African countries –Nigeria, Congo, and Ethiopia. Bangladesh is also ahead of the world’s largest economies in terms of the growth rate of the super-rich. This rate is higher than 85 major economies, including the United States, China, Japan, and India. The percentage of people with at least ten million takas (kotipatis) has increased by 16 per cent in one year. The big problem in the economy is inequality. Taxpayers are not growing in proportion to income. According to experts, the tax-to-GDP ratio, which is still relatively low in Bangladesh, should be double. If the income increases, the taxpayer will increase. Although there is income inequality, the way per capita income is growing at a steady rate. Moreover, with this increase in income, some people have become taxable anew.

If we divide the national income by the total population, we get per capita income. According to economists and experts, it is questionable how much the real income of the country’s people has increased despite the increase in per capita income. The inequality in the country and increase in commodity prices are affecting real income.

According to BBS, the rate of poor people in the country is 20.5 percent of the total population– with the poorest being six percent. Meanwhile, despite the increase in income, tax collection has not increased. There are 83 lakh TINs in a country of around 170 million people. Only 2.3 million people pay income tax. At present, tax collection is 9.4 per cent of GDP, which is the lowest in South Asia. The share of large and medium industries in GDP in 2010 was 13.12 per cent. In 2017, it increased to 16.31 per cent. But in 2010, the share of small industries in GDP was 3.30 percent. And in 2016 it has been only 3.63 percent. This means that big businesspeople occupy the industrial sector.

According to the World Bank, Bangladesh is now a low-middle-income country. According to the agency, if a three-year average per capita income is less than 1,046, which falls in the category of lower-middle-income countries. As such, Bangladesh crossed this limit long ago.

On the other hand, the tax collection in Bangladesh as a proportion of GDP is only 9.4 per cent. It is 18 per cent in India, 16 per cent in Malaysia, 29 per cent in China, 21 per cent in the Maldives, 17 per cent in Pakistan, 12 per cent in Nepal and 15 per cent in Singapore.

Hiren Pandit is a researcher and columnist, he can be contacted at hiren.bnnrc@gmail.com