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The rich getting richer, the poor poorer ?
Enayet Rasul

Government leaders in Bangladesh are fond of quoting figures in support of their statements. Frequently, they make a claim these days that poverty is on the wane in Bangladesh and that significant progress against poverty was achieved in the last two decades. The official position is that 40 per cent in the population now have an existence below the poverty line. How far this claim is an objective one ?
Independent but reliable observers of the situation do not agree. They say that 60 per cent of the country's vast population of 140 million remaining above poverty conditions is no small matter. But they question whether this is the reality and whether official assessments of the poverty situation is a skewed one. In fact, one of the government's own organizations, the Bangladesh Bureau of Statistics (BBS) recently provided statistics that seem to challenge the official position in respect of poverty reduction. The official calculation is that in the last one decade poverty has been reduced by 1 per cent. But the latest survey of the BBS found this rate out to be only 0.5 per cent. The BBS survey also pinpointed an increasing disparity between the rich and the poor.
According to its findings, in the five years between 1999 and 2004, the income of the people above the poverty line in the population as a whole increased by 13.6 per cent while the poor suffered a net 3.56 per cent income loss. More noteworthy is the BBS revealation that in the rural areas, the income of the non poor in this period increased by 3.23 per cent while that of the poor declined by 7.32 per cent. The rural areas have more than 80 per cent of the country's population with the greatest concentration of the poor. But the extent of income loss has been greater in the rural areas in contrast to the national average.
What is the purport of these investigations by a reliable official body ? Clearly, the same contradict the optimism that remarkable progress is being made against poverty and seek to establish, rather, the opposite picture of a worsening poverty situation.
Poverty has an umbilical link with inflation. Inflation ravages the poor in a situation like in Bangladesh where the poor have no way to bargain to adjust their income in proportion to the rising costs of goods and services. Inflation is officially admitted to be on the high side in Bangladesh at nearly 8 per cent though unofficially, but reliably, the rate is well above the double digits. This inflation has been tormenting the country's poor not only for months but for some years without a pause. Thus, it is also questionable that the lot of the poor in a country can improve when they are having to pay for basic goods at sharply increased prices while not benefiting similarly through receipt of higher incomes.
According to a dependable unofficial assessment, the prices of essential commodities consumed by the poor in Bangladesh have, thus, increased in recent times : rice by 65-100 per cent, lentil by 60 per cent, soybean oil 114 per cent, flour 67 per cent, salt 80 per cent, sugar 50 per cent, powder milk 100 per cent, eggs 64 per cent, ginger 243 per cent, beef 71 per cent, fish 90 per cent, vegetables 40 per cent, kerosene 113 per cent and diesel 100 per cent. Most of these are goods consumed by common people or fuel needed to run irrigation activities in rural areas. It needs no explanation how such high prices of these commodities are eroding the already modest purchasing power of these people and pushing up productions in agriculture, the country's biggest economic sector.
When this write-up will be read, the donors will have ended their three-day long meeting with the officials of the government of Bangladesh (GOB) on forging an agenda for poverty reduction in the next three years. Donors in this meeting have underlined the issues that the GOB ought to mainly address for scoring better results against poverty such as corruption and devising of an appropriate mechanism for public purchase . But donors need to be more realistic and recognize the ground realities. No one disputes corruption to be a big issue that needs to be addressed. But the factors that have been singularly affecting the poverty situation in recent years by irrationally driving up prices of essential goods and, thus, eroding the purchasing power of the people which in turn has been deepening poverty, need greater recognition from the donors. They should urge the government to take actions-no less than in relation to corruption-in applying proper inflation control policies. They must also urge the government to take actions against hoarders and profiteers whose ill activities are raising the costs of living of the poor with no economic justifications for the same.
Donors at their Poverty Reduction Forum (PRF) have put the most emphasis on curing corruption to alleviate poverty. But nothing works like a high rate of economic growth to reduce poverty because economic growth creates incomes and jobs for people and puts money into their pockets which in turn creates demand for a large number of goods. The higher demand situation then leads to more investments and hence more jobs and more income.
But the investments linked to higher economic growth are presently constrained in Bangladesh by a host of factors. For example, industrial growth in the country can be significantly better if only government can ensure new industrial entrepreneurs about power and overall energy availability in the short and the long terms. New infrastructures and additional infrastructures which are supportive of investment activities, can similarly help to encourage investment activities.
Government needs to maintain favourable and unchanging fiscal and monetary policies in support of investors. If the investors are convinced that government's fiscal and monetary policies would remain conducive for them over the long haul, then they will be inspired to invest more. Thus, the donor community must not restrict their advice to mainly keeping corruption under control as a way of reducing poverty. They ought to recognize the irrefutable role of higher economic growth as the surest way of making a dent in the poverty situation and exhort GOB to go for the above ways and means to stimulate the economic growth. Not only economic growth, they should advise the achievement of that growth along with measures of greater distributive justice so that wealth is not concentrated into a few hands or members of a class .
It is also very important to pursue policies geared to 'sustainable improvement ' in the conditions of the poor. Ironically, many among the poor rise above the poverty line to only fall below that line after being hit by natural calamities or other man-made adverse conditions. Thus, the government will have to frame and implement policies designed to lift the poor above the poverty line and to prevent developments that would mean their slipping below the poverty line again.
To this end, government will have to run regular social safety net programmes extensively in the rural areas and among the poor in urban areas such as the vulnerable groups feeding programme, food for works programme, cash grant programme for the very poor, etc.
Crop insurance and other forms of insurance covering the assets of rural people will have to be also extensively introduced in the rural areas. The premiums of such insurance policies will have to be affordable to the rural people but they should get the benefits of a good one time payment for the risks to be covered by the policies such as for crop loss, demolition of homesteads by storms, loss of poultry farms, etc.
Government will have to run special programmes to rehabilitate the victims of river erosions. Laws should be made to protect village people from the Shylock type activities of rural moneylenders. Institutional loans or microcredits to rural people must increase to be recovered with low interests charged on such loans. The practice of mortgaging lands by the poor to locally rich people or distress sale of lands and other assets by them must be prohibited by law ; the same should be made a penal offence. Institutional mechanisms will have to be established to aid the poor in special distress situations.
The networks of rural marketing must be improved so that producers of primary commodities can get fair prices for their produce round the year without being forced to sell at a loss to middlemen. The quantum of all kinds of investments in rural areas will have to be increased substantially under an integrated plan.
All of these measures, and others, if pursued tenaciously and sincerely, will work like no other to bring about a sizeable decrease in the poverty situation at an early date. Therefore, attention needs to be focused to these areas. The thinking that poverty will melt away faster by mainly taking actions against corruption is an unrealistic and irrelevant one.