As the sun sets over Dhaka, the glow from the towering skyscrapers casts long shadows over the makeshift homes in the slums. This is the very city where ‘Golden Jilapi’ priced at 20,000 taka per kg gets sold out within 6 days of Ramadan, but a big portion of the population fails to cope with the increasing inflation. This city witnesses ‘overbooking’ of gold-plated ice cream priced at 1 lakh taka, whereas many people are cutting expenses by having one less meal a day. During the same Eid, high-end shops selling clothes costing more than one lakh taka exceeded their sales targets, but shops targeting the low-income groups faced a 35% decline in sales. All these countless contrasting examples portray a stark reality of this time- ‘income and wealth inequality.’
According to HIES 2022, the top 10% of Bangladeshi people hold about 40.92% of total income, while the bottom 10% people sum up only 1.31%. This concerning statistic is reflected also in the Gini Coefficient, a measure of income inequality, of which Bangladesh has now reached 0.499. It's important to remember that countries having a Gini Coefficient of 0.5 or above are marked as having extremely high income inequality. The trend raises questions about the quality of Bangladesh's much-lauded GDP growth, as the economic growth in recent years has been far from inclusive.
Bangladesh is known as one of the fastest growing economies, which is about to post sixth highest GDP growth in Asia in FY24. But the extreme income inequality puts a big question mark on the face of economic growth as it raises the concern, “Does this growth actually represent the wide scenario of Bangladesh or does only a lean portion of it have all the privileges?” Needless to say, Bangladesh’s sensational growth story masks some concerning structural weaknesses that are now coming into play.
Having a mixed economy which is predominant by capitalism, experiencing moderate income inequality is not abnormal. The issue arises when the gap is so alarming that it’s dangerously affecting the sustainability of the country. After all, the dream of economic emancipation through alleviation of economic inequality was one of the driving forces of our liberation war in 1971. And when Franklin D. Roosevelt said, “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little,”- it clearly stated how economic growth cannot see the light of the day without considering and nurturing the larger population who are living under the poverty level. But unfortunately, the statistics call for a reality check of the state of the country and the capital. We are only 0.001 Gini Coefficient points behind from entering the ‘Very High Inequality’ category.
Income inequality is a multi-dimensional curse for Dhaka city that brings about other major concerns like increased unrest and crime rate, frequent labor strikes, malnutrition, educational dropouts, overall low quality of living, underutilization of labor force, unstable society and many others that directly challenge the sustainability of a growing economy. All these make the dream of a strong economy unattainable and leave the example of GDP growth rates as mere misleading numbers.
Behind the curtain of income inequality, there lies many factors that are directly or indirectly contributing to the curse, especially in the capital. The strongest factor is how the whole economic system is predominantly benefiting only the upper echelons of society. Quoting Muhammad Yunus from Banker to the Poor: Micro-Lending and the Battle Against World Poverty, “People were poor not because they were stupid or lazy. They worked all day long, doing complex physical tasks. They were poor because the financial institutions in the country did not help them widen their economic base.” For instance, Bangladesh’s GDP growth rate has been impressive, averaging around 7% annually over the past decade. Yet, the wealth generated has been unevenly distributed. The top 10% of earners control 40% of the country’s total income. The dichotomy in employment opportunities is another significant contributor to income inequality. High-paying jobs in technology, finance, and multinational corporations are typically accessible only to those with advanced education and professional networks. Conversely, a large portion of Dhaka’s workforce is engaged in low-wage, informal sectors such as garment manufacturing, which employs over 4 million people but often pays less than BDT 8,000 per month. The lack of skills and professional network hinders their employment opportunities and satisfactory income in Dhaka. Another pervasive factor that contributes to income inequality is people's lack of access to credit. While banks funnel loans worth thousands of crores of taka (by violating banking rules and procedures) to influential and politically connected businessmen, many small businesses and poor farmers/sharecroppers usually have no access to credit due to lack of collateral such as land and buildings. Even if they manage to secure small loans, the poor are put under constant pressure for repayment.
A Dhaka specific reason behind these problems is geographically centralized industrialization, which has contributed to a higher flow of domestic migration. The capital city is now home to 10 percent of the population, up from 2 per cent in 1980. This huge population working against the inefficient and insufficient working system has played a big role in increasing the income inequality in Dhaka.
While government initiatives aim to address poverty, corruption and inefficiencies often hinder their effectiveness. Bangladesh ranks 146 out of 180 countries on the Corruption Perceptions Index. Misallocation of resources, favoritism, and lack of transparency disproportionately affect the lower-income groups, who rely heavily on public services and social safety nets. For example, the distribution of housing subsidies and food assistance is often marred by corruption, preventing the intended beneficiaries from receiving adequate support. It’s easy to understand how income inequality is a product of increasing inequality of opportunities, particularly to access healthcare, education, financial services and social protection.
Another crucial aspect that needs attention is how all the past incidents and events are especially affecting the low-income groups, while somewhat benefiting the rich. While millions of people in the country lost their sources of income and became unemployed in Dhaka during the pandemic, businessmen and politicians have grown wealthier than ever before. Even in the current scenario of extreme heat waves, the low-income groups are the ones paying the biggest price of decreased productivity, working ability and income. A system that constantly ignores the larger population is a big driver of income inequality.
As Dhaka continues to grow, the challenge lies in ensuring that this growth benefits all its residents. The dichotomous reality of Dhaka is not just a tale of two cities but a call to action for creating a more equitable society. The lives of a low-income person and a high-income person, though worlds apart, are intertwined in the fabric of Dhaka’s future. By addressing income inequality, we must foster a city where prosperity is shared, and every resident has the opportunity to thrive.
written by
Tasnim Taj Abontee
