Poverty alleviation amid soaring cost of living  


Shahiduzzaman Khan     | Published: January 06, 2018 23:11:21


Poverty alleviation amid soaring cost of living  

The city residents saw their cost of living go up by 8.44 per cent last year compared to that in the previous year. It hit a four-year high in 2017 due to spiralling prices of rice, vegetables, electricity, gas and other services as well as rising house rent.

According to a Consumers Association of Bangladesh (CAB) survey, living cost of the 20 million city dwellers hit the highest since 2014 when it rose by 6.82 per cent. The study is based on price data on 114 food items and 22 everyday products collected from 15 markets in the capital. It also took into account the prices of 14 services including gas, electricity and water.

Most of the people were deprived of the fruits of the country's overall development because of the price hike of essentials, including rice. Many people are suffering due to high food prices. Savings of many families fell drastically last year.

Earlier in 2013, the cost of living had shot up by 11 per cent compared to that in the previous year because of increase in the prices of fish, spices, rice, pulses, onion, electricity and petroleum.

Around 1.2 million of the country's 160 million people earn $2.0 a day, and price hike of essentials seriously affect the lives of this section of the population who represents the low-income and poor people.

The soaring cost shows lack of competition in the market, presence of high profit motive, corruption and extortion in almost every stage of the supply chain. The average price of rice soared by 20.4 per cent in 2017 -- the highest since 2011 -- from that a year ago. And prices of coarse rice rose higher than that of fine rice which hit the poor and low-income people hard.

The rice millers and big traders hiked prices of the staple, cashing in on flood-induced losses of crops and depleting stockpile at public granaries last year. They would not have got the scope for increasing prices by creating an artificial supply shortage if the government could build adequate stocks of rice.

Onion saw the highest price hike last year, followed by other vegetables, household gas, rice, liquid milk and beef. Besides, house rent soared by 8.14 per cent and electricity by 6.44 per cent in 2017 from that a year ago. However, prices of some items such as lentil, egg and potato fell last year compared to that in the previous year.

Bangladesh Energy Regulatory Commission increased the electricity price which became effective from December last year. The hike in gas and electricity prices also pushed up the cost of living. On the other hand, there was no mentionable improvement in public transport last year. Healthcare facilities have increased but questions still remain about the quality and costs of healthcare.

Bangladesh's economy is growing more than 7.0 per cent annually and per capita income has exceeded $1,600. The number of poor people has also declined remarkably. Yet, around 20 million people are still suffering from poverty. There is no alternative to keeping the prices of essentials within the reach of the poor.

Analysts say the country needs to raise its economic growth, replicate success stories in poverty reduction, ensure public services for the poor and increase allocation for real social programmes to eliminate extreme poverty.

The government plans to bring down the country's extreme poverty rate to 4.5 per cent by 2021 riding on expectations that gross domestic product will grow by 7.0 per cent a year in the next six years. This, however, still leaves a population of 7.45 million in extreme poverty, the people who live below the lower poverty line.

Since early 1990s, the country has managed to halve the number of people living in extreme poverty to 21 per cent in 2010. In terms of human development and poverty reduction, Bangladesh has become an example. Still, more than 25 per cent of the total population lives in poverty and around 11 per cent in extreme poverty.

Only economic growth will not, in fact, automatically trigger processes that will eradicate extreme poverty. The country needs additional interventions to eradicate extreme poverty. There is also a need for major reorientation of public services, especially healthcare, education, transport and justice.

The government says the current allocation for social programmes is in the range of 2.2 per cent of GDP. But in reality, it is about 0.77 per cent for core social protection programmes, and will be less for the extreme poor. So, further injection of money for the core social protection programmes is required.

There is a need for increasing investment in sustainable agricultural development to address the poverty situation. Any discussion on hunger and intervention must put the poor, marginalised section and women at the core of planning and investment.

The rate of the country's poverty reduction has, indeed, slowed down over the last few years despite government's increased expenditure, about 60 per cent of the annual budget outlays over the previous few years, on the reduction of hunger. Imbalanced budget spending across the country and development approach focused mainly on the central region are the major reasons for failure to achieve the inclusive growth as well as the desired level of poverty reduction.

According to analysts, the recent reduction in the national poverty rate shows uneven progress among different areas and communities as there are many areas where poverty is much severe than the national figures suggest. The latest poverty map should enable policymakers to recognise the geographical and regional variations and spatial inequality as well as provide guidance for effective policy interventions and programmes based on local conditions.

India, Pakistan and Nigeria have become middle-income countries with persistent poverty and social problems. Bangladesh's condition is no exception. The country has to maintain the current favourable macroeconomic growth for combating extreme and chronic poverty in the next decade. This would mean sustaining five major drivers of growth: agriculture, rural non-farm sector, exports, remittances and urbanisation in the days ahead.

All said and done, the government should form a separate wing or division under the Prime Minister's Office or the commerce ministry to keep prices of 12-15 essentials within the reach of the low-income and poor families.

 szkhanfe@gmail.com

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