Coronavirus crisis

Poor state of poverty alleviation

Day labourers are out of work and are afalling below the poverty line again.
Day labourers are out of work and are afalling below the poverty line again.

Abdus Salam’s barber shop in Ashkona was closed till June because of the coronavirus crisis. With his earnings coming to a halt, he had to dip into his savings and borrow, too. With no other alternative, Salam reopened his salon in the last week of June, despite the risks. However, business is slow. He used to earn around Tk 800 to Tk 900 a day, but that has now dwindled to Tk 350 to Tk 400.

Ripon, an employee of Wonder Inn restaurant near the airport, faces a similar predicament. He has been unemployed since 25 March. He managed to run his family for some time with his savings. He has a drivers’ licence so sometimes is hired for occasional trips. Other than that, he does whatever odd job he can manage.

There are so many more like Salam and Ripon, faced with sudden unemployment in these times of coronavirus. There are rickshaw-pullers, day labourers, street vendors and thousands more who are in dire straits. With everything shut down for two or three months after the outbreak of coronavirus, they lost their means of income.

The pandemic has given rise to the number of poor in the country. The already poor have become poorer. The success of the poverty alleviation drives over the last three decades has been dealt a damaging blow by coronavirus.

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Several studies are being carried out on coronavirus-induced poverty. Economist Binayak Sen, director of research at the government-run Bangladesh Institute of Development Studies (BIDS), has conducted a study on ‘Poverty in the time of Corona: Trends, drivers and policy implications in Bangladesh’.

According to this study, with things shutting down in April to June due to coronavirus, 164,000 people were pitched into poverty again. And as their names were not included on the lists of beneficiaries, they do not receive benefits of the government’s safety net programmes.

Coronavirus has thrown a spanner into the works. Studies indicate that even if 8 percent GDP is earned over the next one decade, the poverty rate will not sink below 3 percent by 2031

The study indicates that the rate of poverty shot up from 20 percent to 29 percent in one leap. If the coronavirus situation does not improve, this will rise to 33.2 percent by the end of the year.

Shops, businesses factories all started to reopen in June and July and people like Salam are seeing a glimmer of hope once again. Binayak Sen’s study observes that over the next six months if the working people’s income increases by even 80 percent, the situation will change. Then the poverty rate will be 25 percent by the end of the year.

Bangladesh had been among countries at the forefront of achieving the poverty alleviation targets of the Sustainable Development Goals (SDGs). For over the past decade, the average GDP (Gross Domestic Product) has been over 6 percent. In the 2018-19 fiscal it had reached 8.13 percent. If this growth rate could have been maintained, by 2027 Bangladesh would have been able to achieve target of the SDGs.

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However, coronavirus has thrown a spanner into the works. Studies indicate that even if 8 percent GDP is earned over the next one decade, the poverty rate will not sink below 3 percent by 2031.

Former caretaker government adviser Hossain Zillur Rahman, in 2005, had drawn up the country’s only draft poverty alleviation strategy paper. Speaking about this to Prothom Alo, he said, “The poverty alleviation process that had been carrying on successfully so far, has been hit hard by coronavirus. It will be difficult to revive that pace of poverty alleviation. The strong areas of poverty reduction have been weakened. There are also doubts as to how conducive the global situation will be after corona.”

Poverty in corona crisis

When coronavirus first broke out in the country, attempts were made to control the virus by closing down everything. Binayak Sen’s research reveals how things stood at the time for people who survived on daily earnings. That period was considered to be a strict lockdown. The research shows that many people in the cities became unemployed and the income of many became one fifth of what it was. As a result, in these three months, from the existing 9.36million poor people in the country, the number of poor rose to 35.4 million. In this time of April to June, urban workers saw an 80 percent drop in income and rural workers a 10 percent drop. That means, 16.4 million people were pitched into poverty again. And the sufferings of the already poor tripled.

The study recommended programmes to revive the economy in order to alleviate the sufferings of the working people. If businesses, shops and factories are opening with rules of hygiene strictly enforced, the working people will find some means of income. This is referred to as a relaxed lockdown. As a result of this, if the earnings of these working people in the first quarters (July-September) are raised half of what it was and, in the next quarter (October-December), to 80 percent of what it was, then the number of poor people will not increase in the next six months. On the contrary, it will decrease. The poverty rate of 29 percent (as of June) will fall to 25 percent by around December. This will be a bit higher than the poverty rate of the country in 2016. That means, even if the economy turns around, coronavirus has set poverty back five years.

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8 percent growth inadequate

In order to meet the SDG target of poverty elimination, the rate of poverty must be brought down below 3 percent. According to the results of the research, if the situation does not improve and the poverty rate by the year end increases to 33.2 percent, then over the next year even if the GDP is 8 percent on average for the next 10 years, the poverty rate will fall to only 11.2 percent at the best by 2031. If growth falls, poverty will rise.

Even if there is an 8 percent growth rate over the next 10 years, it will be difficult to fully eliminate poverty.
Shamsul Alam, member, General Economic Division of the Planning Commission's

The research stated that if there was no coronavirus and the present trend of growth, that is 8 percent, had continued, then by 2027 the poverty rate would have fallen below 3 percent.

Binayak Sen, speaking to Prothom Alo, said, “It will not be so easy to achieve the poverty reduction target of the SDG. Given the post-corona state of global business, reaching an 8 percent growth rate will be difficult. Even a 6 to 7 percent growth rate would be good. So even if the growth is low, if it can reduce poverty, then it will be possible to come near the SDG target. The more the benefits of growth reach the grassroots, the more it will be possible to reduce poverty. Just as income disparities must be lessened, the wealth disparity must be addressed too.”

Background papers for 16 sectors have been drawn up to prepare the eighth five-year plan. The general economic division (GED) of the planning commission has taken this poverty-related study as one of the background papers. Along with Binayak Sen, the research was also carried out by two other researchers of BIDS, Zulfiqar Ali and Muntasir Murshed.

The planning commission feels that it will be difficult to achieve the SDG targets due to coronavirus. GED member Shamsul Alam told Prothom Alo, “Even if there is an 8 percent growth rate over the next 10 years, it will be difficult to fully eliminate poverty. We are taking Binayak Sen’s research into consideration in drawing up the next five-year plan.” He said a special three-year plan was being taken up in the eighth five-year plan, aimed at reviving the economy.

All research indicates poverty rise

Several organisations have carried out research on poverty and the poor people’s earnings during the pandemic. In June, the Centre for Policy Dialogue (CPD) said that poverty had risen to 35 percent due to coronavirus. In a joint study conducted by the Power and Participation Research Centre (PPRC) and BRAC Institute of Governance and Development (BIGD), 43 percent of the population has sunk below the poverty line. The global state of poverty has also worsened due to coronavirus. The World Bank on 10 June stated that this year, due to coronavirus, 70 million to 100 million people would become ultra poor.

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Restructuring recommended

The BIDS study made several recommendations about tackling the post-coronavirus crisis. It said reducing the income disparity would not be enough. The disparities in the other social indicators would also have to be reduced.

The recommendations included a mid-term plan to ensure healthcare for all, an increase in health sector allocations in ratio to the GDP, restructuring the social safety nets, increasing the use of technology, employing innovative methods to generate wealth and increasing the capacity of growth to decrease poverty. If these reforms take place, then alongside the already poor people, the new poor like Salam and Ripon can be helped during the hard times.

Binayak Sen said, it will not be possible to manage the post-coronavirus crisis with the prevailing faulty system. Health, social safety nets, the growth structure, everything would have to be reformed.

* This report appeared in the print edition of Prothom Alo and has been rewritten in English by Ayesha Kabir