REDUCING INCOME DISPARITY: Rural development for balanced economic growth

OVER the past few decades, Bangladesh has achieved tremendous progress in reducing poverty and economic progress with consistent gross domestic product growth and improvements in human development indicators, scoring 0.67 according to a report of UNDP in 2022, positioning it at 129 out of 193 countries and territories in the world. However, not everyone has benefitted from this expansion, with rural areas frequently falling behind urban centres in terms of economic possibilities, amenities, and service accessibility. Promoting rural development must be a top priority if balanced and sustained economic growth is to be attained.

State of income inequality 

INCOME inequality in Bangladesh is apparent, with a Gini coefficient of 0.5 in 2022, indicating a substantial level of income disparities. The Gini coefficient, a measure of income inequality where 0 denotes perfect equality and 1 per fect inequality, has demonstrated persistently high levels in Bangladesh. While urban areas have benefitted from industrialisation, export-oriented manufacturing and service sector growth, rural areas remain over-reliant on agriculture, which employs 40 per cent of the labour force but only contributes roughly 13 per cent of GDP. This disparity is intensified by restrained access to education, healthcare and financial services in rural regions, perpetuating a cycle of poverty and inequality. According to the Bangladesh Bureau of Statistics report on the households income and expenditure survey in 2022, the richest 10 per cent of the population hold 41 per cent of the nation’s total income, while the poorest 10 per cent hold just 1.31 per cent. Consequently, this income disparity caused wealth inequality which denotes 0.84 in 2022 from 0.82 in 2016. 

The World Bank reports that per capita income in rural areas is nearly half that of metropolitan areas, meaning that rural households make much less than their urban counterparts. Additionally, rural people are disproportionately impacted by environmental degradation and climate change, which increases their vulnerability and widens the income disparity.

Impression of rural development

RURAL development is one of the main forces for balanced economic growth and poverty alleviation. Rural areas are home to nearly 65 per cent of Bangladesh’s population, and agriculture remains the backbone of the rural economy, employing around 40 per cent of the rural labour force. Bangladesh can create a fairer society by addressing the structural barriers that hinder rural prosperity. Rural development not only improves the livelihoods of rural populations but also contributes to national economic growth and long-term economic sustainability by unlocking the agricultural sector’s potential, fostering entrepreneurship, and generating new markets.

Drawbacks

DESPITE some positive initials on rural development to foster balanced economic growth, our nation has some drawbacks to implementing economic sustainability in rural areas. Bangladesh’s agriculture is mostly dependent on traditional practices, with little use of contemporary technologies. Low yields result from smallholder farmers’ frequent lack of access to high-quality seeds, fertiliser, and irrigation equipment. Food security is also at risk from regular floods, cyclones and salinity intrusions, making the sector extremely vulnerable to climate change. 

Flawed road networks, restricted access to energy and a lack of storage and processing facilities are just a few of the problems that rural communities face due to their inadequate infrastructure. These shortcomings restrict rural producers’ access to markets, raise production costs and impede the effective flow of goods and services. 

Institutional financial services are frequently unavailable to small enterprises and people in rural areas. The Bangladesh Bureau of Statistics reports that only 34 per cent of rural adults have access to formal banking services, compared to 52 per cent in urban areas. 

There are also notable differences in education and skill development between rural and urban communities. There are fewer options for non-farm work and income diversification in rural Bangladesh due to the lower literacy rate of 64 per cent compared to 74 per cent in metropolitan areas. On the other hand, climate vulnerability is a curse for rural farmers in Bangladesh. Rising sea levels, unpredictable rainfall and extreme weather events endanger livelihoods and food security, disproportionately affecting rural areas.  

Initiatives

THE government and private sector should make investments in cutting-edge farming technologies including precision agriculture, high-yield crop types and effective irrigation systems for agricultural modernisation and diversification. To give farmers the information and resources they need to implement new technologies, extension services should be improved.

Diversifying into high-value livestock, fisheries and crops can also increase rural earnings. Rural infrastructures such as roads, bridges, electrification, and digital connectivity — must be expanded to lower production costs and increase market accessibility. When it comes to funding and carrying out these projects, public-private partnerships projects can be quite important. For example, the ‘rural electrification and renewable energy development project’ has improved the quality of life and enabled economic activity by bringing electricity to more than 20 million rural households.

To foster entrepreneurship and investment, rural families and small companies must have greater access to credit and financial services. Digital financial services, mobile banking and microfinance organizations like Grameen Bank and BRAC can all aid in closing the gap, especially for women and underrepresented populations. 

Developing efficient value chains and market linkages can help rural producers access larger markets and obtain better prices for their goods. E-commerce platforms and farmer cooperatives can play a significant role in connecting rural producers with urban and international markets. For example, the ‘digital initiative’ has enabled farmers to access market information and sell their produce online. 

Rural communities can better adapt to climate change by investing in climate-resilient infrastructure, such as saline-tolerant crops and flood-resistant houses. Crop rotation, organic farming and agroforestry are examples of sustainable agricultural methods that can be promoted to improve livelihoods and the environment. A framework for incorporating climate resilience into projects aimed at rural development is offered by the ‘Bangladesh Climate Change Strategy and Action Plan.’ 

To guarantee that development projects are in line with the requirements of rural communities, local governance and community involvement in decision-making processes should be strengthened. Decentralisation of resources and authority can enhance the effectiveness of rural development programs. The ‘union parishad governance project’ has empowered local governments to deliver better services and promote inclusive development.

Role of technology

INNOVATION and technology have the power to revolutionize Bangladesh’s rural development. Rural communities can benefit from affordable and sustainable power from renewable energy technology, while digital platforms can enhance access to information, markets and financial services. Farmers have benefited from mobile-based agricultural advising services, such as the ‘agriculture information service,’ which have assisted them in making well-informed choices on pest management, irrigation and planting.

Rural development must be promoted to foster equitable and balanced economic growth. The nation can realise the full potential of its rural economy by tackling the issues that rural areas face and taking advantage of the opportunities that technology and innovation bring. A coordinated effort from the government and corporate sectors as well as civil society is required to guarantee that rural development becomes a pillar of Bangladesh’s development plan. Only then can the nation achieve its vision of becoming a prosperous and equitable society. -Source: new age