Income inequality between rich and poor has been widening in the country, putting pressure on the economy, according to a book launched yesterday.
The country’s rich people increasingly own the larger shares of the national income but their contribution in terms of tax payment to the national exchequer is too poor, said the book titled “Growth with Equity: Contemporary Development Challenges of Bangladesh.”
The top 10% of the population accounts for 35% of the total national income, but their tax payment is just 1.4% of the gross domestic product (GDP), said the book.
“The Gini coefficient at the national level has increased from 0.36 in 1984-85 to 0.46 in 2010, showing the large increase in national income inequality,” it said.
The author of the book Dr Sadiq Ahmed said: “This rising inequality is a matter of concern and it needs attention. The inequality in the urban area has been increasing faster than rural area.”
He said, “If the average income tax rate were 10%, the personal income taxes stood at 3.5% of the GDP.”
About income gap, he said that one of the policy challenges is to boost domestic and foreign private investments through a major overhaul of investment climate.
Pumping the fund into the economy will not ensure investment, he said rather investment climate dealing with a range of issues like political uncertainties, availability of infrastructure, land availability, business transaction cost needs to be addressed.
Dr Ahmed, also the vice chairman at the Policy Research Institute of Bangladesh (PRI), noted in his book about the upward trend of income inequality in the country at national, rural and urban levels.
Speaking at the launching ceremony, Finance Minister AMA Muhith admitted the fact that income inequality was on the rise despite steps taken to contain it.
Quoting a recent survey, he said the poverty level dropped to 22.4% in 2015 from 31% in 2010.
He said the government has taken adequate steps to upgrade the skills of the labour forces through a project styled SEIP (skills for employment investment programme).
Political affairs adviser to the Prime Minister HT Imam, economic affairs adviser to the Prime Minister Dr Mashiur Rahman, Bangladesh Bank Governor Dr Atiur Rahman, former finance minister M Syeduzzaman, economists Dr Mohiudidn Alamgir and Mustafa K Mujeri, and PRI executive director Ahsan H Mansur were present at the book launching ceremony.
