All income groups suffer during Covid-19 lockdown

BIDS unveils survey report at webinar on Covid-19 coping, adjustments, responses


According survey reports, all income groups of the country have been suffering due to Covid-19 situation. They were most sufferers during the Covid-19 lockdown. 

The survey, conducted by the Bangladesh Institute of Development Studies (BIDS), also said that about 13 percent people have become unemployed in the country due to the Covid-19 situation.  According to the surveys, domestic conflict increased during the Covid-19 lockdown.

  • Bangladesh’s GDP needs to grow at an average 8% per year over next decade to  meet SDG target of zero poverty by 2031
  • Domestic conflict increases during Covid-19 lockdown
  • Income of working class in urban and rural areas have fallen sharply for the lockdown

The survey titled “Coping with COVID-19 and Individual Responses: Findings from a Large Online Survey” was conducted on 30,000 people covering all districts. The BIDS conducted the survey from May 5 to 29 in 2020.

It was unveiled at a webinar on “BIDS Critical Conversion 2020: In the Shadow of COVID -Coping, Adjustments, Responses” held on June 24, arranged by the BIDS. 

Speakers at the webinar said, “If we conduct poverty projections to 2031 from the derailment caused by the Covid-19 shock in 2020, grim realities emerge inescapably. 

Bangladesh was on track in meeting the SDG goal of ‘zero poverty’ by 2031 comfortably under a 7% average growth scenario. Even a 6% average growth rate of GDP would have taken the country closer to achieving the SDG target (poverty headcount projected as being only 2% in 2031).”

They also said that Covid-19 has altered this comfortable on-track situation altogether. Now it appears that, with a sharp rise in poverty from the projected 20.3% in 2019 to 25.1% in 2020 due to Covid-19 shock, Bangladesh’s GDP needs to grow at an average 8% per year over the next decade in order to meet  the SDG target of zero poverty by 2031. Even a 6% average growth for the next decade would be remarkable in the context of post-Covid market uncertainties at home and in the world.

Dr Monzur Hossain, Senior Research Fellow Bangladesh Institute of Development Studies, at his keynote paper titled ‘Addressing MSMEs distress in COVID-19 crisis: Stimulus Package and Policy Responses’ presented at the webinar said that roughly MSMEs contribute 25% of GDP; 86% of industrial employment and constitute over 95% of industrial units. However, there is no official database of MSMEs in Bangladesh. Economic Census 2013 provides an estimate of 7.8 million economic enterprises, of which 11% are SMEs. 

According to his presentation, MSMEs employs about 10 million workers and pay monthly wage bills of Tk. 6000 crore. And estimated monthly production/sales of MSMEs is about Tk. 40,000 crore. 

 He pointed out estimated losses during lockdown. According to his presentation, total loss in the MSME sector for two-months lockdown was estimated at Tk. 92000 crore.  He said that majority of    MSMEs will not get benefit from bank-credit based stimulus declared by the government. 

He recommended that the stimulus should consist of three components: interest waiver for the existing indebted firms; and debt relief grant (say 30% of stimulus loan) and interest subsidy (7% instead of current 5%) for the new loans. 

A coordination from Bangladesh Bank (BB) with SME Foundation and BSCIC is important particularly to identify smaller firms for the stimulus package. BB should take lead in managing and implementing the stimulus for MSMEs, he added.

For addressing the distress of MSMEs, he placed ten-point recommendations which include the modalities of Credit Wholesale Program of SME Foundation (collateral-free and guarantor-free) can be adopted by the banks to reduce default rate; and PKSF can lead the MFI/NGO based lending for Cottage, micro and small firms. 

Considering our estimated capital labor ratio in these firms, 60% of the sanctioned loan can be allocated for wage bill and the rest 40% for capital financing. Otherwise, there will remain possibilities of employee retrenchment and layoff situation

Binayak Sen, Research Director of BIDS, in his presentation on ‘Poverty in the time of Corona: Short-term Effects of Economic Slowdown and Policy Responses through Social Protection’ said that the pace of poverty reduction has slowed down in the 2010s. 

There is an unmistakable sign of rising income inequalities in the 2010s however measured. Inequality in health, nutrition and education has been persistent in the 2010s. 

He said, “If we consider 25% higher poverty line, then additional 16 to 20% of population would be in poverty in rural/ urban areas.”

He also said, “If we modernize our age-old poverty line accordingly (consistent with the Middle Income status), it will result in a much higher poverty (rural poverty would be 45%, and urban poverty would be 36%)”

He mentioned that bunching around the poverty line has increased over 2010-16 in rural areas. “While we often worry more for the near-poor living just above the poverty line, it is important to consider the downward slippages of those already in poverty. 

We need to be equally concerned about the fall of the moderate poor into extreme poverty. Our simulation shows a 10% increase in the lower poverty line will result in 41% increase of extreme poverty in rural areas compared to the baseline.”

He also pointed out short-term poverty effects of Corona lockdown. He said that several scenarios due to lockdown. According to his presentation, 80% drop in income for laboring class in urban areas and 10% drop in income for laboring class in rural areas in the ‘hard lockdown’ exercise. 

Poverty gap and squared poverty gap is likely to increase by additional 6-10 percentage points.  KAS Murshid, Tanveer Mahmood, Nahian Azad  Shashid and Abdur Razzaque Sarker conducted rapid surveys to gain an understanding of the impact of Covid-19 on specific groups, like the poor.

In their presentation, they said. “We felt there was an urgent need for a more general survey to gather nation-wide information, and to cover a wider range of issues. We therefore launched a large online survey to cover all Divisions and districts, with a sample size of almost 30,000.”

It was also said that 19.23% of participants with income less than 5000 taka reported a that their income reduced to 75%.  On the other hand, 23.31% of participants with income between 5000-15000 taka reported an income reduction of 50% relative to last month’s income; and 15.75% of participants with income between 15000 – 30000 taka reported an income reduction of 25% relative to their income in last month.

They mentioned, percentage of people using mask is slightly lower in lower income group, while 23.19 % reported to wash their hands 10 times a day. Lower income groups reported to  more frequently going outside. 

 According to a survey titled “Covid-19 and SMEs: Understanding the Immediate Impact and Coping Strategies” annual revenue was reduced by 67% in 2020 compared to 2019, which is 66% for all SMEs sectors.

According to a survey, Bangladesh will have 16.4 million new poor in 2020 as the income of working class in urban and rural areas have fallen sharply due to the lockdown to stop the spread of Covid-19 pandemic.