8.1 Introduction

8.1.1 The economy of Bangladesh with a large and rapidly growing population and low per capita income reveals conditions of abject poverty for the majority of the people. The task of poverty alleviation with the ultimate aim of its eradication is a challenging one.

8.2 Trend of Poverty

8.2.1 Broadly speaking, poverty refers to forms of economic, social and psychological deprivation occurring among people lacking sufficient ownership, control or access to resources for minimum required level of living. The low level of human resource development in Bangladesh is a serious constraint to the development process of the country. Measured in terms of the Human Development Index (HDI) by UNDP in 1996, out of 174 countries Bangladesh ranked 143rd in 1993. It gave a value/score of 0.365 for Bangladesh. For some of our neighbouring countries the scores were 0.698 for Sri Lanka, 0.442 for Pakistan, 0.436 for India, 0.451 for Myanmar, 0.332 for Nepal and 0.307 for Bhutan. Thus among the neighbouring countries the HDI for Bangladesh was slightly better than Nepal and Bhutan.

8.2.2 The profile of human deprivation (UNDP, Human Development Report, 1996) for 1993 revealed that 47.5 per cent of the people of Bangladesh were income-poor (head count index) while 76.9 per cent were capability-poor (capability poverty reflects the percentage of people who lack basic or minimally essential human capabilities considered as the capability to be well nourished and healthy, capability for healthy reproduction and capability to be educated and knowledgeable). This report posited that 52.85 per cent of people were without access to health services, 63.35 per cent were without sanitation and 26 per cent of children were not attending primary school. Regarding the trend in human development in Bangladesh this report revealed that life expectancy at birth was 39.6 years in 1960 and 55.9 years in 1993; infant mortality rate per thousand live births, 156 in 1960 and 106 in 1993; under-weight children as percentage of children under 5, 84 in 1975 and 66 in 1990; adult literacy rate, 24 per cent in 1970 and 37 per cent in 1993 and gross enrolment ratio for all levels (age 6-23), 30 per cent in 1980 and 32 per cent in 1990.

8.2.3 There have been discernible improvements in some of these social indicators in very recent years. In 1995 life expectancy was 58 years ; gross primary enrolment ratio, 92 per cent; adult literacy 47.3 per cent; infant mortality rate per thousand live births 78; and death of children per thousand before reaching the age of 5, 9.7 compared with 14 in 1991.

8.2.4 Narrowly defined, poverty is generally measured by the percentage of population having income below the minimum expenditure required for meeting the basic needs. A benchmark of the poverty situation in rural Bangladesh was worked out in 1977 classifying absolutely poor as those who could not take more than 90 per cent of the recommended calorie intake and extremely poor as those who could not take more than 80 per cent of the requirement (A. R. Khan, 1977). Poverty line - I is defined as daily intake of 2122 k. cal per person and poverty line - II which is extreme poverty is defined as daily consumption of 1805 k. cal per person.

8.2.5 Poverty is widely recognised as a multi-dimensional problem involving income, consumption, nutrition, health, education, housing, crisis-coping capacity, insecurity, etc. However, with the exception of income (consumption) measure, long-term trend in other dimensions of poverty is difficult to measure due to paucity of data. Focus is therefore on the income dimension of poverty supplemented by available evidences relating to its other dimensions.

8.2.6 The Household Expenditure Survey (HES) shows a modest improvement in poverty by head count since the early eighties. The incidence of poverty at the national level has declined from 52.3 to 49.7 per cent during 1984-92. The urban head count of the poor has declined from 40.9 to 33.6 per cent, while the corresponding figure for the rural area dropped from 53.8 to 52.9 per cent. This suggests a faster poverty reduction rate in urban areas than in the rural. Data officially collected for a Poverty Monitoring Project (BBS) indicate that the incidence of rural poverty stood at about 48 per cent in early 1995 which was about 5 percentage points lower than the level prevailing in 1991/92 as per HES.

8.2.7 The declining trend in income-poverty during the first half of the nineties is corroborated by other sources of data. Panel data collected over 1987-94 for a large scale survey ( BIDS) show that the proportion of rural poor fell from 57.5 per cent in 1987 to 51.7 per cent in 1994. An important factor behind the improvement in rural economic conditions has been the reduction in growth of rural population due to rapid rural-urban migration coupled with the reduction in natural growth of population. It reveals a spatial shift in the incidence of poverty.

8.2.8 The early nineties has also witnessed improvement in terms of alleviating extreme poverty (BIDS). The incidence of hard-core poverty (corresponding to less than 80 per cent of minimum calorie needs) has registered a decline from 26 to 23 per cent during the 1987-94 period. This is in line with other evidences in respect of household access to bare necessities such as shelter and clothing. The proportion of rural households living in extreme vulnerable housing, i.e., jhupri, has fallen from 9 to 2 per cent during 1990-95. Those without minimum clothing (having less than two sets of clothing) has declined from 15 per cent in 1990 to 4 per cent in 1995. The proportion of rural population without winter clothing also dropped from 22 to 7 per cent during the same period.

8.2.9 Such trends notwithstanding, several areas of medium and long-term policy concerns can be identified. First, the pace of improvement in the poverty situation is rather slow. The average annual reduction in head count poverty was about one percentage point since the mid-eighties which is much lower than the comparable record of 2-3 percentage points achieved in East and South East Asian countries. This suggests the need for not only targeting a much higher and sustained growth rate in average incomes, but also making the growth process sufficiently broad-based, i.e., facilitating the active participation of the poor as agents of growth. Second, the measure of progress recorded in income-measure of poverty has not been equally matched by concomitant improvement in several crucial dimensions of poverty such as crisis-coping capacity, improved access to quality health care, etc. Average annual income erosion per rural household arising out of various crisis-events (such as natural disaster, health hazard, death of earning member, etc.) constitutes about 16 per cent of household income; for the extreme poor, the corresponding figure is as high as 27 per cent. Lack of adequate risk-insurance mechanism coupled with limited public health care underlies such a high burden of income erosion on the poor. This is true for the urban poor as well. The urban poor who move up the income ladder after migrating to urban areas may actually experience deterioration in other dimensions of poverty such as lack of adequate shelter, sanitation, personal security, active community life, etc. Third, after every statistical adjustment has been made, the challenge of poverty in Bangladesh remains a monumental one with nearly 50 per cent of the rural population living in poverty of which approximately half are in extreme poverty . The sheer magnitude of poverty, particularly extreme poverty is staggering. More concerted efforts need to be undertaken in this regard involving direct capability-raising programmes through public education and health as well as safety net programmes, particularly for the poorest.

8.3 Movement In and Out of Poverty

8.3.1 All poverty alleviation efforts have been singularly concerned with the poor over time. The dynamic process of impoverisation is however more complex than caring for the poor. There are movements across the poverty lines (BIDS: 1996). In fact, relatively more people moved into the extreme poverty level from above than from the latter group, apparently resulting in polarisation of the non-poor and the extreme poor in the rural areas. In 1989/90, BIDS sample shows that the extreme poor group constituted 16.7 per cent, excluding households (18.3 per cent) who fluctuated between moderate poverty and extreme poverty, while 44.6 per cent were non-poor. In 1994, 17.6 per cent were in extreme poverty (excluding fluctuating group). The corresponding percentage of the non-poor was 45.6 per cent. Relatively more people also crossed into the group of the non-poor with the moderate poor being proportionately less (20.4 per cent in 1989/90 to 18.3 per cent in 1994). This movement from the moderate group is indicative of improvement in absolute poverty, while extreme poverty seems to be growing.

8.3.2 This movement has been caused by unredeemed pressure on land due to inadequate non-farm employment opportunities, consequent increase in marginal farming, frequent natural calamities and above all, fluctuations in sluggish economic growth.

8.4 Causes of Poverty

8.4.1 The major causes of poverty in Bangladesh are low economic growth, inequitable distribution of income, unequal distribution of productive assets, unemployment and under-employment, high rate of population growth, low level of human resources development, natural disasters and limited access to public services.


8.4.2 Low economic growth: High growth rate is conducive to efficiency and poverty alleviation, as is evident from the experience of the high performing Asian economies which have consistently achieved annual growth rates of 7 to 8 per cent. In contrast, during the past two decades, Bangladesh economy has suffered from low GDP growth of 4 to 5 per cent. This was too low a growth to lift the population, particularly the poor, to a higher level of living. According to a 1996 CPD (Centre For Policy Dialogue) study if per capita income were to grow at a rate of 4 per cent per year then it would take an average poor person 13 years to be lifted out of poverty. For an extremely poor person the time will be 23 years. Many may hasten to add that growth per se is not poverty-reducing. But it is a necessary condition though not sufficient. Growth, poverty and inequality are consequences of public policies. If growth is based on appropriate policies inclined towards poverty alleviation, it has the potential to reduce poverty. Participating in and contributing to such development/growth processes, the poor may improve their situation.


8.4.3 Inequitable distribution of income: The pattern of income distribution in the rural areas of Bangladesh reflects deteriorating economic situation of the poor. It indicates that the share of income accruing to the bottom 40 per cent of the rural households deteriorated slightly in 1991/92 (18.96 per cent) compared to 1983/84 (19.24 per cent). The income distribution pattern also indicates that the top 5 per cent of rural households enjoyed 17.8 per cent of the income in 1991/92. The income distribution is presented in Table 8.1.


Table 8.1

Bangladesh: Income Distribution












Income accruing (per cent) to bottom 40 per cent households
















Income accruing (per cent) to top 5 per cent households
















Gini ratio
















Source : BBS, 1993