South Asian Network on Economic Modelling (SANEM) conducted a survey late last year to appraise the socio-economic condition of families in the aftermath of the Covid-19 pandemic. The findings of the survey contain enough negatives to alarm the policymakers and the concerned citizens alike.
According to the survey findings, the proportion of Bangladesh’s total population living below the poverty line has doubled from 21.6 percent in 2018 to 42 percent in late 2020 and the proportion of extreme poor tripled from a mere 9.4 percent to 28.5 percent over the corresponding period. The pandemic has caused serious economic hardship, especially for the poor, all over the world. But such a mammoth slippage is unfathomable, especially when the country achieved nearly 4 percent growth last year compared to negative growth posted by most South Asian countries.
The findings raise serious questions about the efficacy of the government’s recovery packages in reaching the population in dire need of government assistance. The population living marginally above the poverty line or in poverty are always vulnerable to slip into one level down at the slightest sign of any economic instability.
Our policymakers should keep in mind that no degree of economic growth is fulfilling if its benefits fail to reach the downtrodden masses. Development, no matter how glittering it appears, carries little value to the poor unless its benefits trickle down to them in some form or other. Else, they feel left behind as then they only see the glitter of development but not its benefits.
Moreover, such a substantial spike in poverty level may derail Bangladesh in its journey to achieve middle income country status. Apart from maintaining the required per capita Gross National Income (GNI) level, which it likely will, the country must also maintain the threshold level in one of the two other criteria, the Human Assets Index (HAI) and Economic Vulnerability Index (EVI) criteria, in the next triennial review to be held in 2021. Only then the chances of Bangladesh being recognized by the UN as a middle income country in 2024 will remain alive. Otherwise, there will be, at a minimum, three-year delay in Bangladesh achieving middle income status unless the UN relaxes the conditions due to the pandemic.
As of today, the chances of Bangladesh slipping below the threshold level on both counts appear real, demanding immediate pragmatic measures to counter them.
Now the question arises, what went wrong with the government’s relief packages. Why did they fail to deliver the desired benefit to the population in direst need? Was sufficient resources allocated for the vulnerable population in the relief packages? Did the mechanisms used for the delivering the resources to the target beneficiaries work? Well, the time has come to look seriously into the foregoing questions as a first step to mitigate the suffering of the people living below or hovering around the poverty line.
Understandably, the major goal of the relief packages is to keep the economic wheel rolling at a time of unprecedented difficulties caused by the pandemic. It’s common knowledge that preventing the consumption level from rock bottoming is pivotal to succeed in achieving this goal. The following measures may help the country in improving the poverty situation as well as giving the economy a boost:
1) Delivery of increased food and cash resources to the population in dire need;
2) expansion of agricultural grant or loan, as appropriate, to subsistence farmers; and
3) enhancing employment opportunities via increased assistance to small and cottage industries.
Both cash relief and cash freed through food relief will help increase purchasing power of the target population enabling them to buy more manufactured consumer goods, essential for steady economic recovery.
Much thought should be given on formulating the best possible path of achieving speedy economic recovery. The path on which poverty alleviation and economic recovery walks hand in hand. A path on which each complements the other.
It is heartening that the country has attained the economic capacity to make it happen. What’s needed is due diligence to develop necessary plans and programs and their effective execution.
ASM Jahangir is a former Senior Program Manager of USAID/Bangladesh.