Gini Index shows growing gap between Rich and Poor in Bhutan from 2007-2012

The Bhutan Poverty Analysis 2012 report by the National Statistical Bureau (NSB) shows a growing gap between the rich and the poor in Bhutan.

Simply put, if the Bhutanese population was divided into five categories, from the poorest to the richest, the gap between the poorer and richer categories is increasing.

The survey found that the Gini Index, which measures inequality, had increased in urban areas from 0.32 to 0.35, while it had increased in rural areas from 0.32 to 0.34.

In Gini Index the higher the figure, the worse the wealth distribution, as a Gini of 1 would mean that all the wealth in Bhutan would be with just one person. On the other hand, a Gini of zero would mean absolute equality, meaning that everybody would have the same income and consumption capability.

Bhutan’s National Gini Index for 2012 stands at 0.36 up from 0.35 in 2007. This will mean that Bhutan along with Sri Lanka has the highest rich and poor gap in South Asia.

The Gini Index is 0.33 in India, 0.32 in Bangladesh, 0.32 in Nepal, 0.30 in Pakistan, and 0.27 in Afghanistan.

This means that the gap between the rich and the poor is the highest in South Asia, and also one of the highest in the world.

In Bhutan,to calculate the Gini Index as mentioned above, the population was divided into five categories from the poorest to the richest.

The richest category of 20 percent consumes 6.7 times or 670 percent more in one month than the poorest category.

In the poorest category, 20 percent category around 71.7 percent of the expenditure is on food while in the richest 20 percent only 52 percent of the expenditure is on food.

The poorest category has more members in one household at an average size of 6.1 percent compared to just 3.2 in the richest category.

According to NSB officials, while poverty rate is declining in general the Gini Index shows a widening income disparity between the poor and the rich. They said that this could be because the richer people had more opportunities in various businesses like mining, construction, trade, etc.

It is interesting to note that the Gini Index is also roughly comparable to the slow growth of the agricultural sector compared to the fast growth of other sectors like services, manufacturing, construction, consultancy, etc.

Tenzing Lamsang / Thimphu

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5 comments

  1. Sangay Thinley

    Dear Tenzin,

    This is what has been hidden behind the words of the government saying that the poverty has halved. What is the use if the Gap between the rich has poor has reached the highest in the region. This can also be linked to high incidence of corruption, nepotism and favouritism in issuing licenses to the relatives and those who are already well to do.

  2. DPT is a goverment of rich people and veteran senior ministers.if we dont want to widen the gap between have and have not,we have to vote for other new parties.the children of all those rich families are getting married within themselves which is more danger for GINI index so to widen the gap further.rich will never get their hand dirty for those poor people.they became rich at the cost of exploring poor fellow citizen only.therefore,i have decided not to vote for DPT whose president is talking wittily to cheat our innocent voters.He is flattering so much again.The corrupted party(pm,three lonpos,health  minister another aggressive,egoistic and corrupted,gado from haa demkhong the most chamcha who made moh to the top in  corruption rank,centralized oriented governing and  they have done nothing in our demkhong so far.the ex PM  fed our people with his empty golden spoon again during his review tour in dec 2012.moreover many DPT members are old and senior members who have served the goverment for more than 15 years in cabinet.so i am sure they have done their part and now it is time for them to take rest.we have to think of giving chance to those freshers who are aspiring to serve at their best.so democracy should to be all but not in the hand of  few people.we need change but not old wine in new bottle.so i waive for DPT for 2013 election. DPT be contented before people shout ENOUGH IS ENOUGH NOW.

  3. GNI coefficient is an indicative tool between the rich and the poor – I would not claim that it has increased with just 0.01 increase, which is 1% . There is always a plus and minus range. Nevertheless, even if it is at 36%,  it does not relate to poverty. The poverty cut off line was about Nu 750 in 2003 (35% poverty), about Nu 1100 in 2007 (23% poverty), and about Nu 1700 in 2012 (12% poverty). Due to the devaluation of currencies impacted by inflation, the money value of 100 in 2003 is today about Nu 55 about half  and the increase to measure poverty has more than doubled – this looks to be a very fair calculation. 

    However, the gap between the rich and the poor is also explained by the consumption patterns, where the higher quartile of the population enjoys 6 times more than the lowest quartile. The only way to bridge the gap between the rich and the poor is to introduce weighted progressive tax system measuring the value of earning/income -e.g. what is the value of Nu 1000 for an earner of Nu 30,000 a month as compared to the one earning a 100,000 – the value is clearly 3.3% and 1% respectively -similarly Corporate tax must also look into equity and distribution in benefiting the wellbeing of employees and the co-existence apart from the profit for the business. 

  4. South Asia as a whole has one of the biggest gaps between rich and poor of any region worldwide – the fact that Bhutan has about the worst record in a region with a poor record is shameful.

    Wealth in Bhutan is also disproportionatly concentrated in the hands of a relatively small number of people. Instead of 20%, I wonder what the gap would be if you compared only the top 10% or 5% with those at the bottom – even if you left that group at 20%?

    Considering the cost of living in Bhutan, the poverty line is also set far low. It needs to be set higher and automatically increased in line with inflation of the cost of basic neccessities.

    Article 9.7 of our Constitution: “The State shall endeavour to develop and execute policies to minimise inequalities of income, concentration of wealth and promote equitable distribution of public facilities among individuals and people living in different parts of the Kingdom.” – Yet as the article points out from 2007-2012 during the period of the DPT government there has been a growing gap between rich and poor in Bhutan.

    Or maybe they think the disribution of Prados amongst ministers leaving office was an “equitable distribution of public facilities” .

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