Bangladesh has achieved significant progress in almost all areas over the past nearly five and a half decades since independence. But a growing concern lies against this success, and that is inequality. The concentration of wealth, income, opportunities, and power has reached a level that is weakening the foundations of social justice, participation, and sustainable development.
The extent and intensity of the 2024 mass uprising remind us that alongside the long-term economic development, if social inclusion, justness and freedom of expressions are not ensured the foundation of growth becomes precarious. The mass uprising has brought a fundamental question to the fore — for whom the development is? Who will make decisions, and who will reap the benefits? The uprising proved that the fight against inequality is not only economic but also connected with political justice.
Not only income, the extent of inequality is much broader
Discussion of inequality in Bangladesh is often limited to income disparity, but inequality is much deeper and multidimensional. Inequality exists at every level of society, including access, ownership, opportunities, voice, and dignity.
The income inequality index, measured by the Gini coefficient, has exceeded 0.49, one of the highest in South Asia. This figure reflects that the benefits of economic growth are concentrated in the hands of a small portion of the population. Wealth inequality is even deeper; ownership of land, housing, and financial assets is concentrated in the hands of a politically and economically influential class.
Inequality in education and health sectors has further divided society. As the quality of government schools and hospitals declines, the affluent opt for private services, while the poor are stuck with low-quality services.
Gender, ethnic, and religious inequalities are still deep. Female workers work for lower wages in unsafe environments; indigenous and minority communities suffer administrative and political marginalisation. Inequality of voices is the most subtle but dangerous. The voices of civil society, labourers, and youth are largely absent in decision-making processes.
Economic roots of structural inequality
The economic structure of Bangladesh is such that it automatically reproduces inequality. Institutional weaknesses and corruption in all sectors, including, revenue policy, industrial policy, financial sector, and labour markets have made inequality permanent. The revenue structure is a major source of inequality. Nearly two-thirds of revenue comes from indirect taxes, which place more pressure on the poor and middle class. On the other hand, high-income groups receive various tax exemptions and evade taxes using political influence and administrative loopholes. As a result, the fairness of the revenue system breaks down.
The same trend exists in industrial policy and investment structure. The state provides incentives, tax exemptions, and bank loans for wealthy capitalists and politically influential entrepreneurs. Small and medium entrepreneurs cannot easily access loans. Non-performing loans, bank scams, and mismanagement in state-owned enterprises have protected the wealth of the rich and ruined the trust of the ordinary depositors. The banking sector has effectively become an instrument for safeguarding the interests of policymakers and political patrons.
Meanwhile, weaknesses in education and the labour market have left the poor behind. Due to the lack of quality education, they cannot acquire skills; their value in the labour market remains at the lowest level. This inequality is institutionally sanctioned.
Political roots of structural inequality
Behind economic inequality lie deep political discrimination and institutional weaknesses. State policymaking and resource allocation are determined through political patronage, resulting in the economy monopolistic and opaque. Party patronage and nepotism has taken control over the political economy. Political identity is getting priority in budget allocations, public procurement, bank loan distribution, and even government jobs. As a result, the fairness of resource distribution is breaking and state power is concentrating at the hands of a small political-economic group.
Weak democratic institutions have made this inequality permanent. Parliament, local governments, and regulatory agencies are not effective; rather they have become the ineimenrts of power centres in many cases. Institutions such as the Anti-Corruption Commission, the Election Commission, and the central bank could not function freely due to political influence. As a result, corruption and governance failure have become structural engines of inequality. Government contracts, large projects, bank loans, and business licenses are often distributed based on political ties. This process disrupts market competition, reduces opportunities for new entrepreneurs, and accumulates wealth in the hands of a few.
In addition, the politicisation of the state and the contraction of civil society have deepened the political roots of inequality. Transparency and accountability has collapsed as the administration, judiciary, and media have come under partisan influence. Civil society, trade unions, and labour organisations have been silenced, leaving marginalised populations without strong platforms to protect their rights.
Breaking the Kuznets Curve myth
Economist Simon Kuznets, in his famous 1955 theory, argued that inequality increases in the early stages of development. But inequality automatically decreases as education, industrialisation, and social opportunities expand over time. This idea was long recognised in economics textbooks, and many developing countries believed that some inequality alongside growth was ‘natural.’
However, the reality in Bangladesh clearly contradicts this theory. Bangladesh’s GDP growth has been continuous and strong in the past two decades – 6-7 per cent annually; yet, this growth has not reached the majority of the population equally. Consequently, overall inequality has not decreased; rather, it has increased.
But countries like Vietnam, Malaysia, Thailand, and South Korea have shown that inequality is not inevitable with development. In the 1990s, Vietnam invested heavily in education, health, and agricultural production in parallel to the market reforms. As a result, rural labourers and small farmers became key partners in development, and inequality remained controlled. In the 1970s, Malaysia adopted the ‘New Economic Policy’ to reduce ethnic disparities, incorporate communities deprived of education and capital ownership, and strengthen social safety nets.
These examples make it clear that inequality is not an ‘inevitable phase of development,’ but rather the result of policy-driven decisions.
What should be done to reduce inequality?
Reducing inequality requires not only economic reforms but also political will, institutional restructuring, and corruption control. First, progressive tax reform is essential. The scope of income tax, property tax, and inheritance tax must be expanded; digital tracking systems must be implemented to prevent tax evasion. Revenue policy must be designed so that it serves the interests of the people, not those of the wealthy class.
Second, social protection systems must be politically neutral and universal. Transparency in selecting beneficiaries and digital monitoring must be ensured.
Third, controlling corruption and governance failure is now of utmost urgency. In the past decade, sudden corruption and crony capitalism have accelerated inequality in Bangladesh. Nepotism in public procurement, bank loans, and project allocation has eroded public trust. Corruption must be seen not merely as a moral issue but as a structural engine of inequality. Anti-corruption commissions, regulatory bodies, and financial oversight institutions must be freed from political interference.
Fourth, institutional reform is essential. Institutions like the central bank, election commission, media, and local government must be given the opportunity to function independently. Justice-based development is no possible without strong institutions.
Fifth, political inclusion and accountability must be ensured. Active participation of citizens, youth, women, and workers is necessary in policymaking. Democratic structures must be reconstructed so that the centres of power return to the people.
#Selim Raihan is a professor at the Department of Economics, University of Dhaka.