The Financial Express


Rise in per capita income is no panacea

Rise in per capita income is no panacea

Bangladesh has witnessed another jump in per capita income. In the current fiscal year, per-capita income stood at US$2,824 from $2,591 in the previous fiscal year. In other words, the annual average income of the country's people increased by around 9.0 per cent within a year. As the figure made public by the planning minister last week, a debate has started regarding the reliability of the data. Some expressed doubt whether the per-capita income reached the announced level. Others believe that this is not a surprising.

There are valid reasons for raising a question about reliability of the data. Leaving aside the controversy, let the figure furnished by the Bangladesh Bureau of Statistics (BBS) be analysed. What is necessary is to decode the concept of per capita income first. Generally, per capita income refers to the gross national income divided by the total population of the country. Thus, it is an average estimate. If the rate of population surpasses the rate of national income growth, then per capita national income will fall. Again, if both national income and population grow at the same rate, per capita national product will remain constant. Finally, if the growth rate of national income overtakes the population growth rate, per capita income will increase.

In Bangladesh, the last one gets currency. The economic growth rate is estimated at 7.25 per cent in the current fiscal year (FY22) against the average growth rate of the population at around 1.40 per cent. Thus, the rise in per capita income is obvious. In terms of local currency, per capita income in the last fiscal year was Tk 208,751 which increased by over 15 per cent to Tk 241,470 in the current fiscal year. Thus, the annual average monthly income per person stood at Tk 20,122.5 this year.

No doubt that a large number of people do not earn less than the average income and even the monthly income of some people is half or even less. Again, only those who can work, earn for their families. Children and elderly people do not have any personal income. According to the Bangladesh Labour Force Survey (BLFS, 2017), the number of the economically active population was 62.1 million five years back. If it is assumed that the number increased to 75 million now and all of them earn whatever is possible, still half of the population does not have any income of their own. They are dependants to others. Thus, a big jump in per capita income has little to do with them.

Moreover, a good number of people have a monthly income far above Tk 20,125.5. Those who earn Tk 100,000 and more are few. This indicates income disparity in the country although no updated statistics are there as the national statistical agency did not conduct any household income and expenditure survey since 2016.  Nevertheless, income, as well as spending disparity, is quite visible in various proxy indicators and incidents like the long queue for subsidised food items sold from TCB trucks.

Thus, per capita income does not reflect the standard of living or quality of livelihood.  Those who try to equate the rise of per capita income with the betterment of people are mistaken. The rise in per capita income is an obvious phenomenon in a fast-growing economy like Bangladesh. It, however, doesn't ensure benefit for all. So, it is better to shed light on the limitations of the indicators and look for rational distribution of national resources. This requires comprehensive and updated data, the shortcoming of which is indisputable.


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