Urban debt 210 pc higher than rural

People of towns over burdened with debt

Farhad Chowdhury: A significant portion of the people of the country are now meeting their living expenses by taking loans. Due to the inflation caused by the epidemic Corona and the subsequent Russia-Ukraine war, the common people of the country are not able to cover their household expenses with the income they are earning. As a result, their debt is increasing. Meanwhile, families in the city are burdened with debt. Due to the high cost of living in the city, residents are forced to take on more debt. The debt of urban households is about 210 percent higher than that of rural households. Bangladesh Bureau of Statistics (BBS) reported the data.
According to BBS, the average debt of families in Bangladesh is Tk 73,980. There, the average debt of city families is Tk 1 lakh 37 thousand 456. It is almost three times more than the village. At the same time, the debt of the village families is Tk 44,411.
Recently, BBS published the final results of household Income-Expenditure Survey 2022. It can be seen that in 2022, the families living in the cities of the country are burdened with debt. But even in 2016, cities did not have so much debt to families. Analysts say that the burden of expenditure has increased compared to the income of the people of the country. People’s income has not increased at the rate at which various expenses including utility bills, house rent has increased, especially in urban areas. This is one of the major reasons why city people are in debt.
Analyzing the data of household income-expenditure survey, it can be seen that in 2022, the average debt of each family has increased to Tk 73,980. But in the same survey of 2016, the amount of this loan was Tk 37,243. That is, the debt of each family has increased by 111.10 percent in the span of six years.
Apart from this, it can be seen that the debt of rural people is less than that of urban people. In 2022, the debt per family in rural areas was Tk 44,411, in 2016 it was Tk 31,332. That is, the debt of the village families has increased by 41.74 percent in the span of six years.
As shown in the picture of the city, the debt per family has increased to Tk 1 lakh 37 thousand 436, in 2016 it was Tk 59,728. That is, the rate of indebtedness of families living in cities has increased by 130.10 percent in a span of six years.
Analysis of the departmental data of the survey shows that the families of Dhaka Division have the highest debt. In particular, the average debt of each family in Dhaka city is Tk 2 lakh 10 thousand 677. Households living in Rangpur city have the second highest debt of Tk 1 lakh 186. Besides, among the remaining cities, Barisal has Tk 95,125, Chittagong Tk 73,440, Khulna Tk 73,777, Mymensingh Tk 57,780, Rajshahi city Tk 48,816, Sylhet city has Tk 75,321. As such, Rajshahi city families have the lowest debt.
Since the beginning of the Russia-Ukraine war in February 2022, commodity prices around the world have been rising abnormally. There is a dollar crisis in the country. It also increases the price of daily commodities in the country. Inflation increases. As a result, many middle-class, lower-middle-class and low-income people are forced to take loans. That picture has emerged in the survey of BBS. Apart from this, it can be seen from Bangladesh Bank’s data that people’s borrowing from credit cards has increased last year.
However, despite the rise in borrowing, the country’s poverty rate has also decreased in the last six years. Now the overall poverty rate is 18.7 percent. Six years ago, i.e. in 2016, this rate was 24.3 percent. But while poverty reduction has slowed, inequality has also increased.
According to the BBS survey, the extreme poverty rate in the country is now 5.6 percent. Six years ago, it was 12.9 percent. Poverty is higher in villages than in cities. Now the poverty rate in villages is 20.5 percent, in cities it is 14.7 percent. During this period, poverty has decreased by an average of 93 percentage points per year. In the previous six years, i.e. from 2010 to 2016, poverty decreased by an average of 1.3 percentage points per year. That is, the pace of poverty reduction has slowed down.
This year’s household income and expenditure survey has collected data from 14,400 families across the country. Yearly data was collected from January 1 to December 31, 2022. The Food Income and Expenditure Survey does not only highlight the poverty situation. In that survey, family income, food type, calorie intake, lifestyle expenses have come up.
Analysts say that the cost of living in our country is higher than in other less developed countries as the reason why urban people are more indebted than rural people. Again, there is a huge disparity between our standard of living and the cost of living. We live a low standard of living at a high cost. Due to this, the need for borrowing has increased among a class of urban common people. In addition, there is pressure on inflation and commodity prices.
Overall inflation in the country decreased slightly last November. Headline inflation eased to 9.49 percent this month, the lowest in seven months. Last September and October inflation was 9.63 and 9.93 percent respectively.
Food inflation declined in November across rural and urban areas. However, food inflation is higher in rural than in urban areas, at 10.86 percent. Food inflation in rural and urban areas was over 12.5 percent in October.
According to BBS data, food price inflation was 12.56 percent last October, which is the highest in the last 11 years and 9 months. However, food price inflation decreased to 10.76 percent in November.
On the other hand, non-food inflation decreased by 14.14 percentage points to 8.16 percent in November compared to October. Last September and October, non-food inflation was 7.82 percent and 8.30 percent respectively.
Inflation is like a tax that burdens everyone, rich and poor alike. A slight drop in food inflation means that the poor and middle class have less of a burden to run. The prices of winter vegetables, fish, meat, eggs etc. in the market have decreased in the last month. Although the prices of some daily commodities including rice, flour, sugar, pulses, onions, soybean oil, potatoes are still high.