By Nur Mohammad Sohan
Not so long ago, a paper note of 1,000 taka was introduced in Bangladesh. A few days ago, a paper note of 1,000 taka had a huge value. If someone had a reddish-pink colored 1,000 taka note that was introduced in 2008, he would be very happy mentally. He would wear a new lungi and a white shirt and go out for the tea stall or the market. The red-pink paper note of 1,000 taka would shine from the outside of the pocket of the white shirt. Due to the inability of the shopkeepers to give retail, many days would pass just by showing it. When he went to the market, he would come back with a full bag. and everyone in the family would be happy. But, the current situation is such that not only one thousand taka note but also a bundle of thousand taka notes have to go to the market and struggle. There is no excitement like before! The high prices of goods have reached such a point that the money in the market runs out but the shopping is not finished. In economics, this is known as inflation. Inflation is a condition of the economy where the prices of goods continuously increase and the purchasing power of money decreases. Paul Samuelson said, ‘Inflation is the process by which money loses its value. ’ For example, from a thousand taka note to a thousand taka bundle run after for few goods. Although mild inflation is a great boon for the economy of the country, the danger begins when its level fluctuates. Especially when inflation is high, the suffering of low-income people knows no bounds, where the rich become richer. As a result, income inequality is created which is as for the economy as a natural disaster. Income inequality is an economic situation where income is not distributed equally within a society or country.
Uncontrolled inflation is a tragic and unbearable phenomenon for low-income individuals in the country. One of its critical consequences is the rise of income inequality. According to the results of the Johansen co-integration test, a 1% increase in inflation leads to a 4.99% rise in income inequality. Income inequality bends not only the economic structure but also the backbone of social harmony, giving rise to class divisions in society.
For a country, inflation is a sin and the income inequality caused by inflation is the punishment for that sin. Unfortunately, both exist in extreme levels in Bangladesh. Inflation is a problem that Bangladesh has been experiencing since its inception. According to the latest Bangladesh Bureau of Statistics survey, the inflation rate in the country in November was 11.38 percent, which was 10.87 percent in October. According to Bangladesh Bank’s policy, inflation above 6% is considered harmful for the country. Experts believe that since inflation in Bangladesh is currently between 10-12%, it is creating a dangerous situation. Inflation has been giving rise to income inequality in the country year after year. According to the Gini coefficient used to measure income inequality, the income inequality in Bangladesh reached 0.499 in 2022, which was 0.483 in 2016. This increasing value almost indicates high income inequality. According to Karl Marx, the high-income group in society appropriates the value produced by capital owners and workers, which creates income inequality. As a result, the poverty rate in the country is continuously increasing. The non-governmental organization Research and Policy Integration for Development (RAPID) analyzed the data of the Bangladesh Bureau of Statistics (BBS) from May 2022 to September 2024 and showed that during this period, 7.86 million people have fallen below the poverty line. Of these, 3.82 million people have fallen from poor to extremely poor. And 9.82 million people are at risk of falling below the poverty line. Poverty is one of the obstacles on the path from developing countries to developed countries. Which is continuously increasing in the country.
Income inequality due to inflation has taken a serious form in the country. According to experts, income inequality is a natural phenomenon in a capitalist state system. But excessive, unbridled income inequality is not at all beneficial for the economy. To prevent income inequality, inflation must be reined in. Because, as a result of inflation, where low-income people are spending all their income on purchasing daily necessities, the rich are building mountains of wealth through investment.
As inflation increases, the rich get richer and the poor get poorer. While the prices of goods increase during inflation, workers’ wages do not rise accordingly. Factors such as increased debt burdens, higher interest rates, lack of government policy intervention, unregulated markets, absence of progressive tax systems, and inadequate social security exacerbate income inequality in Bangladesh. According to the BBS “Household Income and Expenditure Survey 2022,” 40.92% of total income in Bangladesh is held by the top 10% of households. This alarming figure underscores the critical level of income inequality.
Low-income individuals are struggling to survive, often skipping meals, shedding tears in the market due to unaffordability, withdrawing their children from school, pushing them into illiteracy and unemployment, marrying off daughters at a young age, wearing the same clothes for years, and compromising on essential nutrition and healthcare. Meanwhile, the wealthy are hoarding resources that could sustain hundreds or even thousands of people.
In fine, the country must emerge from this dire state to ensure balanced economic growth and progress. The government needs to take necessary measures to maintain a moderate inflation rate. Citizens must be aware of artificial crises that lead to increased demand and inflation, and the government must regulate markets with a firm hand. Comprehensive progress cannot be achieved by leaving a vast population behind due to income inequality. Inspired by nationalist ideals and the spirit of the Liberation War, collective efforts must be made for the welfare of the country. Only then can Bangladesh emerge as a nation with equitable income distribution and a strong economy on the global stage.
The writer is a member of the Social Research Group (SRG) and an undergraduate student of Public Administration at Comilla University, Bangladesh. The article is a work in progress.
