Covid-19 may lead to long-term poverty: Study

A study by the Power and Participation Research Centre (PPRC) and the Brac Institute for Governance and Development (BIGD) has raised concerns that the ongoing Covid-19 pandemic may lead to long-term poverty in the country.

A decline in earnings, inadequate support, and an increase in non-food expenditure are putting pressure on people's savings. This is leading to debt dependency, is reducing food intake, and creating reverse migration, the study said. 

The full report on the findings of the telephonic survey titled "Livelihoods, Coping, and Recovery during Covid-19 Crisis" was unveiled at a webinar on Saturday. Partial findings of the survey were published in August.  

Speakers at the event spoke about increasing cash flow from bailout packages to small and medium entrepreneurs and distributing cash amongst them in alternative ways through non-banking financial institutions outside purview of traditional banking channels.

For economic recovery, they stressed on targeted policy support, social protection, urban healthcare, and creation of skilled human capital through quality education.

They also recommended introducing financial assistance programmes for urban and village women to reduce gender gap in the labour market.  

Between June 20 and July 2, 7,638 people took part in the survey. Of them, 4,241 (56%) were from cities, 3,304 (43%) from villages, and 1% were from Chattogram Hill Tracts areas.   

The survey found that most of the people had slipped below the poverty line due to the pandemic. Urban and rural communities above the poverty line in February had fallen below it in April and June.   

Setting per capita income of rural people at Tk88 per day and that of urban slum dwellers at Tk105, the survey found people had fallen below the poverty line in April, but the situation had slightly improved in June. However, they still remain below the poverty line.  

It found that despite the decline in income, non-food expenses, house rent, utility expenses, medical cost, and transport expenses had increased. The crisis had worsened for the urban population versus those residing in rural areas.

Taking this into consideration, the speakers had advised increasing cash flow to urban people.

According to the survey, per capita food expenditure in rural areas and urban slums had decreased by 21% and 27% respectively, and the situation had not improved in June. Most people have not consumed milk and meat since March and had to dip into their savings to buy food in April. In June, people relied on loans.

Moreover, 15.64% of people left Dhaka, and 8.35% left Chattogram. On the other hand, 1.26% moved to Dhaka from different districts, and 0.62% returned to Chattogram from elsewhere.    

PPRC Executive Director Hossain Zillur Rahman moderated Saturday's webinar. Discussants included Dr Wahiduddin Mahmud, eminent economist; Dr Shantayanan Devarajan, professor of practice of international development at Georgetown University; Dr Robin Burgess; professor of economics and director of the International Growth Centre at London School of Economics; Dr Fahmida Khatun, executive director, Centre for Policy Dialogue (CPD); and Md Tazul Islam, minister of local government, rural development and cooperatives.  

Dr Imran Matin, executive director of BIGD, presented the survey findings.

Zillur said the proportion of newly poor was 22.8% in April, which fell to 21.7% in June.

"People are still living below the poverty line. Because the labour market is informal, it is creating low-income traps. Gender gap has emerged in labour market."

He said cash should be delivered to small and medium entrepreneurs from incentive packages through alternative channels to revive the economy.       

"This will boost their capability. Moreover, targeted policy support is needed for economic recovery." 

Zillur also stressed on the importance of strengthening urban social protection.

"Moreover, there should be targeted cash support for the new poor and nutritional support for the extreme poor. Urban primary health care, as well as quality education for building human capital and recouping learning losses should be emphasised."    

The Local Government Minister, Tajul, said, "Prime Minister Sheikh Hasina unveiled a policy guideline when the pandemic began. We are trying to mitigate the situation. Bailout packages were announced to revive the sectors affected by the pandemic."

"The textile sector was given more money as it mostly employs women. The government has been continually providing assistance as part of measures to tackle the pandemic. We have looked into food security," he added.

Economist Wahiduddin said there was inadequate social safety to handle the pandemic.      

"It is necessary to take up plans that will help people get some relief. Because of the lack of adequate planning for the new poor, support should now be given to small entrepreneurs."

Terming the rural economy as very diversified, he said employment would be generated if the rural economy could be fully activated.

Dr Shantayanan stressed on the criticality of cash transfers to people to help them cope with the pandemic shocks.

He said emphasis should be laid on boosting the capability of small and medium entrepreneurs, with targeted mechanisms to support them.   

CPD's Dr Fahmida said although a package had been announced for small and medium entrepreneurs, loan disbursement was very low.

"Loans are disbursed quickly for big entrepreneurs, but that is not the case for the smaller ones. Distribution channels for allocated money need to be changed. The emphasis should be on cash transfers for social security." 

Dr Burgess of London School of Economics said there should be emphasis on creating a livelihood support policy to ease people's lives. 

"Many have lost jobs and are migrating elsewhere. In this situation, they should be given microfinance support," he added.