ADDRESSING THE ISSUES OF POVERTY AND INEQUALITY:

NATIONAL BUDGET FY2019-20

Sayed Imran Ur Rahman

Student

Department of Economics

Southeast University
 Poverty Criteria

FOOD INTAKE METHOD DAILY INCOME METHOD

Poor Absolutely Poor Poor Absolutely Poor

Daily food calorie Daily food calorie Daily income is Daily income is
intake is below 2122. intake is below 1805. below $2.00 below $1.25

SOURCE: The World Bank

 Size of National Budgets & Rates of Poverty

P o v e r t y – (i n % o f t o t a l p o p u la ti o n )
T o tal B u d g e t – (in c ro re ta k a )

25.03%
523190

25.03%

24.90%
463573
600000

24.30%
400266
500000 25.50%

23.80%
340605

23.80%
25.00%
400000
295100

24.50%
250506

300000 24.00%

22.90%
23.50%
200000
23.00%

22.50%
100000
22.00%
0 21.50%
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2014 2015 2016 2017 2018

Increase in National Budgets over Years Rate of Poverty over Years

There is an effect of national budget in reducing poverty

T o tal B u d g e t – (in c ro re ta k a )
Size of National Budgets & Rates of Absolute Poverty

A bs olute P ove rty - (in % )

523190

13.80%
16.00%

12.90%
463573
600000

12.10%

11.80%
14.00%

400266

11.30%
500000
340605 12.00%
400000
295100

10.00%
250506

300000 8.00%

6.00%
200000

4.00%
100000
2.00%
0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 0.00%
2014 2015 2016 2017 2018
Increase in National Budgets over Years Rate of Absolute Poverty over Years

The rate of reduction of absolute poverty is slower than the rate of increase in national budget
 Size of National Budgets & Income Inequality
T o tal B u d g e t – (in c ro re ta k a )

0.6

0.5 0.48

523190
0.47 0.46

Gini Ratio
0.45

463573
600000
0.4 0.39
0.36

400266
500000
340605
0.3
400000
295100
250506

300000 0.2

200000
0.1
100000

0
0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Year
Increase in National Budgets over Years Gini Ratio over Time

The Gini ratio is increasing gradually which indicates that income inequality is increasing.
 Increase in GDP and Income Inequality

P e r c e n ti le S h a r e o f N a ti o n a l In c o m e
9
GDP Growth Rate

8.14%
7.86%
7

7.28%
7.11%
40 38.01
6.55%

37.64
6 35.84
36.74

35

5 29.23
30
28.3

4 25

3 20 Bottom 20% - (Poor)

Top 10% - (Rich)
15
2
10
7.2 6.52
1 6.17
5.26 5.22 5.01
5

0 0
2014-15 2015-16 2016-17 2017-18 2018-19 Year
Percentile Share of Income of the Poor and the Rich in
GDP Growth Rates over Fiscal Years
National Income
Though the GDP growth rate is increasing, the income gap between the poor and the rich is also increasing.
 Policies in Proposed Budget FY2019-20 for Reducing Poverty and Inequality

GDP Growth Rate

Government wants to increase GDP as a tool to alleviate poverty

Increased Allocation For Rural Development

Increased allotment in rural development and ADP may be effective to reduce rural poverty rates.

Increased Allowances For otherwise Disabled People

In the forthcoming budget, it is proposed that allowance for handicapped people will be increased to 750 from 700.

“Increased Allocation for ‘Food For Work” Initiative in ADP

Due to ‘Food For Work’ initiative and more allocation in ADP, inequality and poverty may decrease gradually.

Pension Scheme For Every Adults

Finance minister proposed to raise the number of adults receiving pension from 40 lakhs to 44 lakhs from next budget.
Policies in Proposed Budget- FY2019-20 that may increase poverty and inequality

Increased Prices of Daily Commodities

Price of oil is likely to increase due to newly imposed VAT while it was free from VAT previously.

Reduced Excise Duty in Gold Import

Excise duty to import 11.664 gram gold bar is proposed to reduce to 2000 taka from 3000 taka which is an opportunity
for the rich.

Discounted Surcharges For Rich

Surcharges for rich people is proposed to be reduced which will increase the gap between poor and rich.
 Recommendations

Ensuring equitable access to productive resources and assets.

Taking policies to redistribute income and wealth between the poor and the rich through progressive taxation
and land reform.

Evasion of income tax should be stopped.

More allocation for social development projects.

Emphasis on pro-poor and pro-employment friendly investment and economic growth.

Fixing a minimum wage for informal sector employees.

THANK YOU