80pc families spend more than they earn

Eighty per cent of families in the country cannot cover household expenses as their monthly expenditure exceeds their income, said a survey of the private research organisation Power and Participation Research Centre (PPRC).

According to the PPRC study, the bottom 40 per cent of families in terms of population has an average monthly income of Tk 14,881, while their average monthly expenditure is Tk 17,387. The middle 40 per cent of families have an average monthly income of Tk 28,818, but their household expenditure stands at Tk 29,727.

The survey data shows about 80 per cent of families in the country cannot earn according to their needs. As a result, they have to rely on loans to run their households. PPRC said 52 per cent of families are in debt for one purpose or another. Among these, the largest share has taken loans to meet household expenses. One-third of the families in the country are forced to borrow just to manage daily expenses.

On the other hand, the richest 20 per cent of families are doing well. Their monthly income exceeds their expenditure. The average monthly income of these families is Tk 78,503, while their monthly expenditure is Tk 70,770.

This survey was conducted on the opinions of 8,067 families. A report prepared on the data and findings was recently published at an event in the capital. There are currently, according to the Bangladesh Bureau of Statistics (BBS), more than 40 million families in the country.

Regarding this, Selim Raihan, Executive Director of the private research organisation South Asian Network on Economic Modeling (SANEM), told Prothom Alo that a large portion of the population’s income is not consistent with their expenditure. They are dependent on various government and private assistance programmes. Many rely on relatives and friends.

After Covid-19, this pressure has widened. A significant portion of the population has fallen into more adverse circumstances. Moreover, prevailing inflation has reduced real incomes, while wages have not increased proportionately. Previously, people could afford clothes with some leftover income—now they cannot. Entertainment has become out of reach. And, this is the reality, he insisted.

When families cannot earn according to their needs to run a household or sustain livelihood, many are forced into debt. However, each family’s needs differ. Some take loans when faced with crises just to cover living expenses. Others borrow for house construction or repairs. Some borrow to cover children’s education or to invest in business.

The PPRC study highlights several reasons for taking loans. The top five are as follows:

The majority of people take loans to cover daily household expenses. When income is insufficient, they rely on loans. They manage their families by borrowing from relatives and friends. According to PPRC’s data, 29 per cent of indebted families borrow to cover household expenses.

In cases of major illness, people have no choice but to take loans to cover costs. Daily wage earners are often forced to borrow for medical needs. According to the PPRC survey, 10.75 per cent of indebted families borrow for medical expenses.

Building or repairing a house or flat involves heavy costs. Many cannot meet this expenditure with savings alone. As a result, many borrow to cover construction or repair costs. According to the PPRC survey, 10.13 per cent of families borrow for this purpose.

In most cases, low-income people buy essentials on credit throughout the month. When money runs out mid-month, they are forced to purchase on credit. At the end of the month, when they receive wages or salaries, they repay these dues. According to the PPRC survey, 9.23 per cent of indebted families borrow to clear shop dues.

Many borrow to invest in small businesses, while wealthy families take loans to establish industries. According to PPRC data, 8.96 per cent of families borrow for business investment.

Apart from these five, there are several other reasons families borrow money. These include agricultural expenses, repayment of previous loans, education costs, migration expenses, purchase of movable property, agricultural machinery rentals, paying rent, dowry payments, purchasing mobile phones, paying bribes for jobs, electricity connection costs, and extortion payments.