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Poverty rate has decreased from 12% in 2012 to 8.2% in 2017

The poverty rate has decreased from 12 percent in 2012 to 8.2 percent in 2017.

This is the fourth Poverty Analysis Report (PAR) by the National Statistical Bureau. The poverty rates have been decreasing consistently from 31.7% in 2003 to 23.2% in 2007 and 12.0% in 2012.

The analysis shows that most of the poverty reduction between 2012 and 2017 was due to increasing non-food consumption with no major change in food consumption patterns. For instance, surveyed households on average spent more on transportation, clothing, and recreation in 2017, compared to 2012, after adjusting for inflation.

The survey team found that 8.2% of the population is poor. Poor persons are those belonging to households with per capita consumption short of the minimum cost of satisfying the country’s poverty line.

This means that around one out of 12 persons belongs to households whose per capita real consumption is below the total poverty line of Nu 2,195.95 per person per month. The poverty line in 2012 was 1,704.84 and in 2007 it was 1,096.94.

The report stated poverty in Bhutan is still a rural phenomenon with about 11.9 percent of the rural population being poor against only 0.8 percent in the urban areas.

The survey team observed that subsistence incidence or extreme poverty, is relatively small in the country. Only around 1.5 percent of the population in Bhutan belong to households that spend less per person per month than the food poverty line of Nu 1,473.45. While nearly 0.8 percent of extremely poor persons in rural areas are small, it is significantly large in relation to that of the urban areas (0.01%).

Overall, poverty rate in the country reduced from 23.2 percent in 2007 to 12 percent in 2012 and further to 8.2 percent in 2017. Rural poverty reduced from 30.9 percent in 2007 to 16.7 percent in 2012 and 11.9 percent in 2017. However, the proportion of poor in urban areas remained practically unchanged at about 2 percent between 2007 and 2012, but significantly reduced to 0.7 percent in 2017.

About 97 percent of poor persons throughout the country reside in rural areas. Among the extremely poor, practically everyone resides in rural areas. Consequently, efforts toward poverty reduction ought to continue with a strong focus on rural development says the report.

It can be derived that, of the estimated surveyed population of 692,895 persons in the country, 56,855 are estimated to be poor and 10,687 are subsistence poor.

So about six percent of households are poor, and one percent are subsistence poor households. Out of the estimated 164,011 households, 9,424 are poor, and 1,677 are extremely poor.

Poverty measures based on population are larger than those based on the number of households because poor households, on average, have more household members.

At the Dzongkhag level, it is observed that poverty rates are highest in Dagana, Zhemgang, Mongar, Trongsa, and Pemagatshel.

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However, the Survey shows that Haa, Thimphu and Paro have the least poverty rates. The four Thromdes (Phuentsholing Thromde, Samdrup Jongkhar Thromde, Gelephu Thromde and Thimphu Thromde) have poverty rates of at almost one percent of their respective populations.

In terms of subsistence poverty, the highest rate is observed in Dagana with 11 percent of the population being extremely poor. Further, about a quarter (23.2 percent) of all the extremely poor in Bhutan reside in Dagana. Some Dzongkhags such as Bumthang, Paro and Thimphu have virtually no subsistence poverty. Among Thromdes, Phuentsholing Thromde, Gelephu Thromde and Thimphu Thromde also have no subsistence poverty.

The estimated number of poor households across Dzongkhags are Dagana (23.7 percent), Zhemgang (16.3 percent), Mongar (14.0 percent) which have a higher proportion of poor households, with Dagana and Zhemgang also contributing a big share to total household poverty in the country.

Among the Dzongkhags, Dagana (13.7 percent), Samtse (13.6 percent) and Mongar (12.6 percent) have the highest shares of the entire poor population in country; with 40 percent of the poor residing in these three Dzongkhags alone. In terms of the distribution of subsistence poor, again the Dzongkhags of Dagana (23.2 percent), Mongar (15.3 percent) and Samtse (12.4 percent) have the highest proportion of the subsistence poor population. In fact, half of the subsistence poor live in these three Dzongkhags.

The report stated that for both the poverty gap and poverty squared gap, as well as for poverty rate, the larger the value of the index,the greater the degree of poverty. These poverty measures are important for planning poverty reduction programs. All things being equal, sub-groups of the population with higher measures should receive priority for poverty reduction programs according to the report.

According to the PAR, Poverty is deeper and more severe in rural areas than in urban areas. The poverty gap in rural areas is almost 2.4 percent as compared to just below 0.2 percent in urban areas. Poverty squared gap in rural areas is a little over 0.7 percent while it is just 0.04 percent in urban areas.

Some Dzongkhags such as Mongar and Samtse have very high poverty measures (whether in terms of gap or severity) but Dagana has the highest contribution to the national poverty measures.

Subsistence poverty decreased from 5.9 percent in 2007 to about 2.8 percent in 2012. In 2017, the subsistence poverty rate further reduced to 1.6 percent. In the rural areas, the rate was reduced from 8 percent in 2007 to 3.9 percent in 2012, and it is 2.5 percent in 2017. In the urban areas, the subsistence poverty rate is significantly low (around three in 10,000 persons).

However, the difference in household size between the poor and non-poor households is slightly larger for female-headed households. Both poverty rates and subsistence poverty rates increase with the size of the households.

The increase in poverty rate is faster than subsistence poverty rate as the household size increases. The share of households increases rapidly reaching a maximum of 41 percent for households with four or five members. Though, the share then decreases and reaches a minimum of 3 percent for households with nine or more members. This indicates that, although the poverty rates are higher among households with a larger household size, the corresponding share of these households to total households is much less.

Likewise, welfare and household demographic composition are observed to have a relationship with the characteristics of the household head. On average, female-headed households are observed to be less poor than male-headed households. The trend is observed to be similar in both urban and rural areas. However, the sex of the household head does not have much influence on subsistence poverty.

Living standard of a person is higher among those households whose heads are currently working as compared to those whose heads are either unemployed or not in the labour force.

Among the employed, poverty rates are higher in households whose heads are working in agriculture (9.6 percent), though this is a decrease by almost half from the 2012 (18.5 percent) figure for the same. Most of the poor live in households whose head is either engaged in agriculture (68.8 percent) or whose head is not actively participating in the labour force (20.5 percent).

Household

Higher the level of education completed by the household head, the lower the poverty rate for the household. In other words, the level of poverty decreases as the educational level of the household head increases. About nine percent of the households with household heads who had not attended a school are poor. The returns to education increase considerably if the head had attended middle secondary level of education irrespective of whether the household is in an urban or rural area.

The poverty rates increase with the age of the household head. The poverty rate is about 2 percent for those below 25 years as compared to 10 percent for those aged 65 years and older. This suggests the importance of providing social protection for elderly people. The survey team noticed that most household heads (68.4 percent) in Bhutan are aged between 25 to 54 years, while less than 3 percent are below the age of 25 years, and about 11 percent are 65 years and above.

House

The report stated there is no significant difference in the types of floor materials used by the poor and the non-poor households, except in the use of cement/tiles, clay/earthen and plank/shingles. About 12 percent of the poor households have cement/tile floors, compared to 32 percent of the non-poor households.

18 percent of the poor households have clay/ earthen floors while only 6 percent of the non-poor households have clay/earthen floors. A higher proportion of the poor households (17.6 percent) use plank/singles for floors in their residences compared to non-poor households (11.8 percent).

Overall, there is an increase in the use of wood (42.4 percent) and cement/tiles (30.6 percent) types of floor materials and a decrease in the use of plank/ shingles (12.1 percent) as compared to BLSS 2012.

More than half (54.9 percent) of the poor households have residences with mud-bounded walls while a slightly more than one-third (34.7 percent) of the non-poor households have dwellings that have mud-bounded walls. Only 12 percent of the poor households have cement-bounded or concrete walls as compared to 40 percent of the non-poor households. The proportion of household with wood/branches is higher in the poor households (19.6 percent) as compared to non-poor households (12.5 percent).

Land

Compared to 2012, the proportion of households in 2017 who own land has increased in both urban (32.3 percent in 2012) and rural (83.6 percent in 2012) areas, resulting in an overall increase in land ownership in the country in 2017.

More than 22.7 percent of rural households own up to one acre of land with the proportion of rural households owning land decreasing with the size of land holding. Compared to PAR 2012, the proportion of landless households (12.6 percent) and those households who own up-to one acre of land have decreased while households in other categories have increased. The poverty rate is the lowest (3.0 percent) for landless households and the highest for those who own four to five acres (13.2 percent) of land. The incidence of poverty is almost similar for those who own up-to one acre (9.2percent), two to three acres (9.3percent) and three to four acres (9.1 percent) of land.

Across the country, 71 percent of households own land with a higher proportion owned by poor households (94.1 percent). The proportion of households owning land in rural areas (87.5 percent) is more than two times that of urban areas (41.0 percent).

This Report shows that poverty in Bhutan is still very much a rural phenomenon, and that living standards vary considerably across the Dzongkhags.

An analysis using the World Development Indicators by the World Bank shows that Bhutan’s poverty reduction over the last 10 years is remarkable from a global perspective.

Of the 38 countries for which there are more than three national poverty estimates since 2005, Bhutan ranks 7th in terms of the rate of poverty reduction (23.2% to 8.2% in 10 years or 9.9% reduction in poverty headcount rate every year).

Basic Needs

The report stated between the poor and non-poor in 2017 the poor having a literacy rate of 57 percent compared to that of the non-poor (66.8 percent).

Likewise, the survey team observed within urban and rural areas the literacy rate of the poor in urban areas is 16 percentage points lower than the rate for the urban non-poor, while in the rural areas the rate for the poor is just two percentage points lower than the rural non-poor.

Just about 50 percent of the non-poor adult populations (15+) have not attended school/institute, compared to about 67 percent of the adult poor population.

Around 12 percent of the surveyed population reported that they had suffered from sickness or injury in the four weeks prior to the Survey, with no significant difference between the poor and non-poor.

However, within this population, only a little over half (61.0 percent) of the poor visited a medical facility, compared to about 70 percent of the non-poor. The majority (99.5 percent) of the population have access to improved water source with hardly any disparity between the poor and the non-poor households.

At least 92 percent of households have access to improved sanitation between poor and non-poor households, both in urban and rural areas.

Among the non-poor households, 67 percent have at least one smart phone, compared to only 29 percent among poor households. However, ordinary phone ownership among poor households (80.5 percent) is significantly higher than non-poor households (54.3 percent).

Nationally, only 39 percent among the poor households have television, compared to 76 percent of the non-poor households.

Most of the poor suggest that road infrastructure, water supply, and medical facilities should be the priorities of the Government. However, in rural areas, poor households specify public transport, while in urban areas; employment creation was specified as priority concern.

Inequality

The Gini index, which measures inequality, has remained almost the same at the national level (0.36 in 2012 and 0.38 in 2017).

On average, a person in the top 20 percent of the national population consumes 6.7 times more than a person in the bottom 20 percent of the population.

However, a person in the top 10 percent consumes 1.6 times more than a person in the bottom 40 percent of the population.

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