Improving living standard

Economists moot new poverty benchmark

FE Report | Published: October 25, 2018 09:27:25 | Updated: November 04, 2018 21:35:06

Picture used for representational purpose — Collected

Senior economist Prof Wahiduddin Mahmud has suggested the government change the poverty estimation method considering the current global and domestic socio-economic scenarios.

"Our national poverty-line income should be changing over time as standard of living improves. It's a moving goal," he said.

"Why should we be staying at the same poverty line when we become a middle-income country? We should redefine the poverty line estimate," Prof Mahmud stated.

"Currently, poverty is estimated here by expenditure. But if we estimate poverty considering income, the rate could be higher," he said at a programme in Dhaka on Wednesday.

Bangladesh should measure poverty by redefining the poverty-line income taking into account the changes occurred over time and improvement in living standards.

The General Economic Division (GED) of the Planning Commission organised the event at its office to launch two books on poverty.

The books were titled 'Aiding Resilience among the Extreme Poor in Bangladesh' and 'Extreme Poverty, Growth and Inequality in Bangladesh'.

University Press Ltd (UPL) Dhaka and Practical Action Publishing, UK, published the books respectively. At the event, state minister for finance and planning MA Mannan agreed with Prof Mahmud and said poverty method based on income estimate needs to be changed.

"Reality must be faced so we get real picture," added Mr Mannan who was present as the chief guest.

Geof Wood, emeritus professor at University of Bath, UK, Dr Binayak Sen, research director at Bangladesh Institute of Development Studies (BIDS), economist Prof Abdul Bayes took part in the discussion.

GED member Prof Shamsul Alam chaired the event.            

According to the BBS data, Bangladesh's poverty rate came down to 21.8 per cent and the extreme poverty rate to 11.3 per cent in 2018.

The rates were 23.1 per cent and 12.1 per cent a year ago, the data showed.

Prof Mahmud said Bangladesh estimates poverty based on its own measurement tools. "If we use global methods, the estimate could be different."

He, however, said the country is on track to eradicate extreme poverty.

"Once Bangladesh was seen as a test case-if it can develop, any other country can develop," he told the gathering.

"But there is a difference now. If it is said that if any country leads to eradicate poverty, may be it could be Bangladesh," the economist asserted.

Meanwhile, Dr Sen said although poverty is falling in Bangladesh, income inequality is rising.

"We need to think how to address the higher trend of income inequality as the Gini coefficient could go beyond 5.2 level within a short period," he added.

The Gini coefficient is a scale of measuring income inequality where 0 to 1.0 is considered as the lower to higher levels of inequality.

Although many people are now out of poverty, Mr Sen said, they might slip into "poverty trap" for varies possible shocks and other factors.

Prof Bayes said the level of inequality was low in the post-independence period, but it is higher now.

"Overtime the inequality has become larger and poverty has declined," the economist mentioned.

Meanwhile, Prof Alam said when the Gini coefficient of a country goes above 0.5, it will fall into a danger zone owing to social unrest.

The Gini coefficient in Bangladesh has now stood at 0.458, according to the BBS data.

Prof Mahmud said Bangladesh has a lot of social safety-net programmes but most of them are overlapping, thus increasing the service delivery cost.

Meanwhile, Prof Wood said extreme poor families cannot easily be reached through generic policy and operational packages.

"They require much more precise support, calibrated to their particular combination of circumstances," he said.

Prof Wood suggested setting up a new "cadre of social workers" to give more support to the vulnerable households.

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