The majority of the new poor are to be found in the urban areas, says a study
Amid the rising number of new poor in Bangladesh due to the Covid-19 pandemic, economists suggest the government should go for a pro-poor national budget that safeguards both their lives and livelihoods.
In line with that suggestion, they are urging the government to prioritize the social safety net, employment, small and medium enterprises (SMEs) as well as the health, education and agriculture sectors in the upcoming budget.
They said the poor — particularly day labourers, hawkers, beggars, rootless people, security guards, maids, transport and restaurant workers, and people affected by natural disasters — across Bangladesh have been facing emerging vulnerabilities escalating debt and declining savings one year into the pandemic.
According to the report of Power and Participation Research Centre (PPRC) and BRAC Institute of Governance and Development (BIGD), the Covid-19 pandemic has caused 24.5 million new people to fall below the line of poverty between June 2020 and March 2021, and the debt burden has doubled for people living in both urban and rural areas.
The majority of the new poor are to be found in the urban areas.
“There was a 4% rise in extreme poverty within the study sample. Despite some recovery, national estimate of ‘new poor’ in March 2021 stood at 14.7% which translates into a population of 24.5 million,” the survey, titled One Year into the Covid-19 Crisis, by PPRC and BIGD showed.
The data also showed that households are faced with a 2nd wave crisis with significantly depleted coping capacity - savings depleted by 24% and 11% in rural and urban respectively. Meanwhile the debt burden doubled during the period for most groups. It is worth remembering that income drop for the poor and vulnerable was above 70% immediately after the first wave in March-April 2020, according to the report.
“One year from the crisis, 50% of the ‘new poor’ remain stuck in poverty. However, 8% of pre-Covid-19 employed were still unemployed in March 2021. Around half were in their pre-covid occupation but 41% had to move to another occupation. The unemployment rate remains high for skilled labour, salaried jobs and housemaids,” it also said.
The data mentioned that 47% of the early migrants were non-poor before the pandemic and 57% of early migrants moved to other cities. On the other hand, one-third (61%) of late migrants were poor before the pandemic and majority (60%) of late migrants moved to villages.
There was a 98% rise in non-food expenditure burden between June 2020 and March 2021. Besides, significant rises in all items such as rent (46%), health (81%), transportation (104%) and utility (51%), were recorded in the recent survey.
Executive Chairman of PPRC Dr Hossain Zillur Rahman said although social protection is playing only a token role in Covid-19 response, it is a critical priority.
“Parallel to existing safety nets, there is urgent need for specific new and significant programs for urban poor and ‘new poor’ with effective targeting and leveraging technology,” he said, adding that smart lockdown to avoid such a new income shock is both a health and an economic priority.
As a final policy message, the economist emphasized that to tackle women and “new poor” caught in an emerging poverty trap due to vulnerability of the meso-economy including CMSME sector, a targeted and big push is necessary for which the study calls for an urgent national CMSME recovery action plan.
Talking to UNB, the research director of Centre for Policy Dialogue (CPD) Dr Khandaker Golam Moazzem appreciated the government taking different programmes to assist the poor during the pandemic. But he criticized the distribution level.
"Someone takes assistance from the stimulus packages several times on the other hand someone is deprived of it. So, transparency should be ensured in the distribution level so that new poor get funds from the packages properly,” he added.
The economist said there are a good number of NGOs in the country who work with slum dwellers and rootless people.
“The government can take support from them to make an accurate list to provide funds in the right way. We need accountability to address it. So, the government should work with them,” he added.
“The impact of the coronavirus will not depart from the country in the next two years. Poor people should be provided enough assistance two times in a single year. So social safety net programs should be prioritized more in the upcoming budget,” Moazzem further said.
Former lead economist of the World Bank Dr Zahid Hussain said the government is now providing assistance to the poor like last year. Due to inflation, per head Tk2,500 is not enough. So, the amount should be increased to mitigate it.
“We noticed list and amount scarcity problems in the previous stimulus packages. The list should be made not to depend on bureaucracy. However, the stimulus packages support SMEs to sustain their existence. Big businesses get but micro businesses are being deprived of the packages. So, the packages should continue. The government has to take necessary steps in the upcoming budget so that the business environment does not immobilize,” he also said.
Finance Minister AHM Mustafa Kamal has recently said the improvement of life and livelihood of the country’s poor people will get highest priority in the next national budget.
“The poor people will get priority in our next national budget. The government’s target is to bring the poor people out of poverty. The government will provide Tk2,500 each to 3.5 million low-income groups as Covid-19 financial support through the formal system,” he also said.