Beneath The Surface Some insights into rural poverty Abdul Bayes BANGLADESH Rural Advancement Committee (Brac) is poised for preparing a report on the State of the Rural Economy of Bangladesh focusing on the impacts of the most recent economic crisis. The base of the analysis would be built around a repeated sample survey of roughly 2000 households from 62 villages of the country. A stratified random sampling technique was used for selection of households. Drawing upon the data set, I shall attempt to shed some light on the state of economic conditions of rural people. But since data are still being processed, the findings should be treated as tentative and applicable to 44 villages or for two-thirds of the total sample. Household status Let us first look at the distribution of rural households in terms of 'self-stated economic status' -- a widely acclaimed yardstick of economic assessment these days. In 2008, of the total sample of 1380 households so far, roughly 15% considered them to be 'rich and middle class.' Those who occasionally move up and down the 'life line' -- labeled as 'lower middle class' -- constitutes another 41%. On the other hand, poor (about 34%) and very poor (about 11%) together claim 44% of all rural households in 2008. Two observations need to be underlined here. First, the very poor or extremely poor now number roughly 1 crore 20 lakhs. This is, perhaps, not out of line with existing national notion about 'hardcore' poor. These hardcore poor need special care by the government during any crisis. Second, as said before, the proportion of rural poor is estimated to be 44% in 2008. This compares sharply with about 38% as observed in a similar survey of the same households in 2004. It may be mentioned here that a detailed discussion on this could be found in a Book authored by Dr. Mahabub Hossain and myself (Gramer Manush Grameen Arthonity -- Jibon Jibiker Porjalochona, 2007). However, the figures imply that, as compared to 2004, more of rural people perceive them as poor. Self-stated poverty has risen in rural areas. Economic condition Have economic conditions of the rural households improved, deteriorated or remained same between, say, 2007 and 2008? Understandably, the last one-year can be considered as one of the most critical parts of rural livelihoods conditioned massively by adverse national and international factors. However, before we answer this question, we shall rename the earlier stated economic groups as 'solvent,' 'self-sufficient,' 'moderate poor' and 'very poor.' We observe that among solvent group (rich and upper middle class), there was no negative change in economic condition over the year under review. In fact, 27% of them posited improvement and 24% reported deterioration, thus, giving a thin edge on improvement side for this group. This is quite obvious and incontestable too. But the situation seems to worsen as we move down the economic ladder. The 'self sufficient' or 'lower middle class' group faced hardships last one year or so as evidenced from the fact that only about 20% of them reported an improvement compared to 32% perceiving a deterioration in economic condition. The net change is a negative 12%. On the other hand, only 14% of the 'moderate poor' reported an improvement and 32% perceived deterioration in economic condition. This gives a negative net change in economic condition by 18%. And finally, the hardest hit of the economic crisis waited for the lowest group -- very poor -- when the net negative change is estimated to be 25%, about 16% improved and 41% deteriorated. By and large, in aggregate, it follows that there was net deterioration in economic condition in rural areas: about 19% of households perceived an improvement and about 32% reported deterioration. Poverty syndrome It indicates that poverty has increased in rural areas over the last one year. But that was not the case during last 20 years. About 57% of the rural households reported an improvement in economic during last 20 years compared to 18% reporting a deterioration. Thus, there was a positive net change by 38%. Excepting the 'very poor' group -- who witnessed negative net change even during the last 20 years -- all other groups experienced a positive net change. The message from the survey seems to suggest three things. First, the economic condition of the extreme poor always continued to deteriorate during the whole period of comparison and the magnitude of the negative net change hovered around 25-27%. There was no light at the end of the tunnel for this group, notwithstanding periodic perceptions. Second, the 'self-sufficient' group slipped down substantially from positive 50% to negative 12%. As said earlier, this group is most sensitive to shocks and it is not unlikely that both internal and external shocks of recent times put them in pervasive perils. Finally, had the sample households not witnessed improvement in economic conditions over last 20 years, the recent crises could make deterioration deeper than it is now. Reasons for change Those who witnessed no rough weather during last one year -- claiming improvement -- cited remittances (both local and foreign) as the prime force behind their fortunes. Followed is income from agriculture and business. The multiple reasons cited by them also rank remittances as top followed by income from agriculture and business. It is thus no surprising that recent rise in prices of agricultural products made the surplus producers reap home a better reward from market swings. But those who suffered an economic setback, and hence a deterioration in economic condition, primarily pointed to increased prices of essential goods. Roughly half of the respondents referred to this as a prime cause of deterioration. This was followed by flood/cyclone. Among the multiple causes, again, these two factors were cited to be of prime importance. Government assistance It appears that various assistance programs of the government cover 7% of rural households. If targeted and subsidised next couple of months, severe food security problem could be averted for 1.2 crore of extreme poor people. But survey data seem to smell a rotten rat into the whole process where non-target households are also reported to have received those facilities. This implies that a mis-targetting condition in the distribution of government doles prevails. The policy implication is that the current policy of helping the extreme poor such as through VGF, VGD, if properly targeted, could keep the extreme poor on an even keel at this hour of the crisis. In that case, there may not be need for increasing the size of the net involving additional resources. Abdul Bayes is a Professor of Economics at Jahangirnagar University. (Editorial)