April 3, 2023
DHAKA – One of the takeaways from the finance minister’s March 19 pre-budget session with economists was the unanimous appeal to the government to address the budget’s impact on the common people. It will not be an exaggeration to contend that the budget of the ordinary person has taken a big hit in the post-Covid era. Families in the lower-income categories have seen their real income decline due to geopolitical tensions, food insecurity, global inflation and supply chain gnarls. “Shrinkflation” has forced millions to go without two decent meals and cut back on the consumption of fish, meat and eggs, which provide essential nutrients for their body. In today’s comments, I will focus on hunger and malnutrition affecting the working poor.
While the government is declaring a victory over poverty, citing the forthcoming Household Income and Expenditure Survey (HIES), eminent independent social scientists in Bangladesh and economists at the March 19 conclave strongly disagreed. “The way that the price level is increasing, and the impact it had on low and middle-income people, it is counter-intuitive that the number of people below the poverty line would decline,” said Professor Mustafizur Rahman of Centre for Policy Dialgoue (CPD). Research by South Asian Network on Economic Modelling (SANEM) in March only confirmed my view that many more poor people are going hungry now than before.
At a recent gathering in the City of Cambridge in Massachusetts, USA, the visiting foreign minister of Bangladesh was questioned on the country’s economic conditions. He did not flinch for a second before he declaimed, “Nobody in the country dies of hunger”. This oft-quoted line, a slogan, repeatedly brandished in the past, particularly during an election year, has now lost its lustre.
One needs to be wary of confusing the two threats that the poor face: “death by starvation” and the “pangs of hunger”. They are different. First, government statistics may not reveal any death by starvation, but the pains of hunger and malnutrition are omnipresent. Secondly, the effects of starvation and hunger are clinically quite different, and attempts to equate them are akin to comparing apples and oranges.
Let’s consider starvation first. Last week, the head of the United Nations World Food Programme warned that up to 345 million people worldwide – or roughly 50 times the number known to have died from Covid so far – could face starvation as food prices soar and shortages increase. This figure represents a doubling in global food insecurity since early 2020. Bangladesh’s poor did not escape this global scourge’s wrath. The landless casual workers in rural areas and the urban poor face a bleak prospect. Already, roughly 20 million people in the country are facing acute malnutrition.
I finally ask the leaders, instead of parroting, “nobody dies of hunger”, why couldn’t we raise the bar and say, “there is not a single child who suffers from malnutrition. There is not a single person who dies from a lack of medical care and there’s not a single elderly who goes hungry?”
Various news accounts highlight the coping strategy devised by the low-income and the poor to survive the ire of inflation. Families on a tight budget have turned to kitchen markets known as “Fokinni Bazar” which have sprung up in many slum and poverty-stricken areas. One such market that has gained prominence is located under Bijoy Sarani-Tejgaon Flyover and is frequented by rickshaw-pullers, day-labourers, shopkeepers, and other people from low-income groups in the area.
People experiencing moderate levels of food insecurity will typically eat low-quality diets and might have been forced, at times during the year, to also reduce the quantity of food they would normally eat, while those experiencing severe levels would have gone for entire days without eating, due to lack of money or other resources to obtain food. It’s not a big surprise to me that many of our poor and low-income people are cutting back on their budget for food and all the items they purchase.
To understand this phenomenon, known as shrinkflation, lets us consider the budget of an urban family with a household income of Tk 22,000 per month. He is the family’s sole bread earner, paying Tk 6,000 for housing and spending the rest on food, transportation, school supplies, fuel, entertainment and clothing. For this family of four, the food budget eats up more than half of the income, and its share could have increased if he had some savings. Over the last year, prices of rice, wheat, pulses, edible oils, sugar, salt, protein diets, milk, and baby food have increased by 20-40 percent. But now they have cut back on food since all other bills have gone up. The urban poor, including the rickshaw pullers, service employees, and small business owners, are all confronted with this lose-lose situation.
The human toll, as pinpointed by World Economic Forum’s Saadia Zahidi, a Forum Managing Director, may be severe: “Real wages are falling and can’t keep pace with surging prices. In low and medium-income countries, food and energy security could easily lead to social unrest.”
The impact on rural and urban poor may show some odd patterns. In recent times, in general, urban people have been facing a higher rate of food inflation relative to the rural population, while the picture is the opposite in the case of non-food inflation.
To combat the current situation, our social welfare programmes must reach out to the target groups, including eligible senior citizens. Policymakers should use social welfare policies to protect the poorest from rising prices. Allowances under social safety net programmes for the poor should be increased.
These policies could include targeted safety nets such as cash transfers, food, and in-kind transfers, school feeding programmes, and public works programmes. Research also shows that calculating inflation indexes for different income groups provides better information on inflation actually experienced by the poor and should inform the design of social safety nets.
I finally ask the leaders, instead of parroting, “nobody dies of hunger”, why couldn’t we raise the bar and say, “there is not a single child who suffers from malnutrition. There is not a single person who dies from a lack of medical care and there’s not a single elderly who goes hungry?”
The other day, I asked a rickshaw puller, “Can you tell me if there are any days when you go without a meal?” he demurred. “I have a large family, and some of them have to make sacrifices,” he added.
When I asked him if his earnings had increased with the rising economic prosperity level, he said, “No, sir. I hope you understand how we, the poor make a living, but most importantly, how we make our ends meet.” In other words, they said, we’re trying to make do in this day of inflation with less or, as some people said, “I have barkat in my family”.
Dr Abdullah Shibli is an economist and works for Change Healthcare, Inc., an information technology company. He also serves as senior research fellow at the US-based International Sustainable Development Institute (ISDI).